Home sellers raise prices in highest bounce for ten years

Monday 20th February 2012

In a burst of optimism, new sellers have raised their asking prices by 4.1% – the highest monthly increase since April 2002, and some £70,000 ahead of current actual selling prices.

The average asking price for a property that has come on the market within the last month is now £233,252.

The increase – of nearly £11,000 – is up from January’s average asking price of £224,060 and comes despite a warning that in parts of the country, much stock already on the market is “over-priced and unsaleable”.

Reporting this morning, Rightmove described the biggest hike in asking prices for nearly ten years as “a surprisingly strong uplift given the challenging economic environment”.

But it said that the rise is partly fuelled by cash-rich sectors of the market, where buyer demand is exceeding suitable property supply.

Director Miles Shipside warned sellers: “There is pricing power if you are selling the right type of property in the right place, where enough potential buyers have access to funding.

“But if your local market does not have those characteristics and your price-pump is based on little more than seasonal optimism and an estate agent’s hot air, then be prepared for buyer response to be a let-down.”

He added: “In some micro-markets, sellers have the upper hand, but on the whole, a buyer with cash or a mortgage offer is the one in the driving seat.”

He said there was evidence that after depressed activity for the last four years, some households had simply decided they had to get on and move. He said there could be a growing acceptance of today’s housing market as the ‘new norm’.

He said: “Search activity on Rightmove is up by 19% on January 2011 and it could be a sign that some of those who can afford to move have decided to get on with their lives, driven either by desperation or by coming to terms with the constant barrage of negative economic news being the new norm.

“You can get tired of gloomy news or get used to it, and indeed for some cash-rich buyers, life has moved on to such an extent that it’s like the Lehman Brothers collapse never happened.”

Average weekly listings on Rightmove are currently running at 30% below pre-credit crunch levels, with a weekly run rate of 24,406 new listings.

Shipside said: “Stock levels are still on the high side in some less active parts of the country, but much of that stock is perhaps over-priced and unsaleable.

“However, in some micro-markets, the shortage of existing and new instructions has helped contribute to the largest monthly jump in new selling asking prices for nearly a decade.

“While the mass-market stays at home, those that have access to funding continue to be active and have spending power, resulting in this month’s big price hike.”

Rightmove’s current asking price of £233,252 compares with actual selling prices of £160,907 and £162,228 currently being reported by Halifax and Nationwide respectively.