By Oliver Newby
With an insufficient supply of properties available on the market, sellers are able to find a buyer quicker than ever previously seen, and twice as quickly as in the same period in the more normal market of 2019. This momentum is despite the growing economic headwinds, though forecasts show that these headwinds could slow the pace of price rises towards the end of the year.
Nationally asking prices rose by 1.6% in April, down slightly from a 1.7% increase in March, with more than half of all properties currently selling at or above the asking price. Data shows that the price of property coming to market has hit a new record high for the third consecutive month. Month-on-month prices have risen by an average of 1.6%, or £5,537, and over the last three months by £19,082. This figure is the largest three-month price increase that has ever been recorded, with high buyer demand enabling sellers to ask and achieve ever higher prices.
This fastest-ever ‘speed of sale’ means that 53% of properties that sell are now selling at, or over their final advertised asking price, the highest percentage we have ever measured. Overall, our analysis shows that properties are achieving 98.9% of the final advertised asking price on average, which is also the highest percentage since our records began.
Our analysis has found that an increase in the share of homes being purchased by first-time buyers and investors, rather than home movers, has driven a rise in chain-free transactions. So far in 2022, 73% of all buyers have been chain-free, up from 69% in 2021 and a low of 65% in 2010.
Working trends are also having a big part to play in the market, with the continued shift to ‘work from home’ having a big impact on the demands of buyers. Stats show there has been an increase in potential buyers looking to move out of cities during the pandemic, suggesting people are looking further afield as they aren’t working from offices as much.
Analysis by Rightmove found 40% of people sending enquiries on its portal were from people looking to leave a city where they live in February 2020. This has risen to 50% as of February 2022, however research suggests there are signs of the trend slowing, with people returning to office working in the major cities. It will be interesting to see how these working trends evolve with the likelihood of the ‘new normal’ very much becoming the ‘norm’.
With the above in mind house prices look set for new record highs in the coming months despite the cost-of-living squeeze.
As mentioned, property prices have continued to soar in recent months despite 30-year high inflation and a worsening cost-of-living crisis, and the signs are that they will rise further in the coming months considering the ongoing supply-demand imbalance.
The imbalance between supply and demand will continue to drive prices upwards through the spring and into the summer, despite growing pressures on household finances and rising borrowing costs, with the average property price in England and Wales set to hit a new record high of £389,712 in June 2022, according to the House Price Forecast.
The supply crunch, which has seen the volume of properties for sale plummet to record lows, combined with unseasonably strong buyer demand, is preventing sale prices from falling, as would normally be expected when households experience sudden financial pressure. Only time we tell how long these price hikes continue.
Oliver Newby MNAEA
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