New asking prices have hit record highs this month, jumping by 1.5%, with 5% fewer properties coming to the market compared with this time last year.
Meanwhile the Bank of England has warned that as the house price boom continues, borrowers are stretching their incomes as never before to buy properties, with more than 27% borrowing more than four times their annual income. This is the highest figure ever and double the ratio of eight years ago.
Rightmove this morning reports that typical new asking prices for first-time and second-stepper properties have hit all-time highs of £189,840 and £272,031 respectively.
The overall average asking price of newly-marketed property jumped by 1.5%, the largest increase for this time of year since 2007.
The portal said the price rise was also exacerbated by a dip in supply, with 5% fewer properties coming to market compared with the same period a year ago at 112,693.
First-time buyer properties, those with one or two bedrooms, have hit an average of £189,840 – 0.5% higher than their previous high seen in June 2017.
Second-stepper properties, with three or four bedrooms excluding four-bedroom detached, are now coming to the market at an average price of £272,031 – 0.9% dearer than their previous high recorded in October 2017.
However the use of averages hides significant regional differences with overall average asking prices hitting highs in just four out of 11 regions.
Time on the market has fallen, with properties taking 65 days to exchange this month, compared with 72 in February, while average stock is 43 properties per agent.
Miles Shipside, Rightmove director and housing market analyst, said: “It remains to be seen if this month’s 11-year price rise high for March is a catch-up anomaly after two more subdued price rise months, or an early sign of price pressure building up a real head of steam as we enter the spring market.
“Either way, sellers need to be mindful of increasingly stretched buyer affordability, and the more they increase prices the more buyers will hit their ceiling on the amount they are able to save for a deposit and borrow for a mortgage.
“There does however still seem to be potential price headroom in parts of the country, especially in some of the regions in the north, and in the more mass-market sectors.
“However, sooner or later higher prices tend to mean fewer people can afford to move.”
Separately, the Bank of England says there has been a sharp rise in borrowing at four to four-and-a-half times annual earnings. A total of 17.65% of mortgage lending was at these levels in the third quarter of last year, and a further 10.65% of mortgages went to borrowers at higher levels.
Former business secretary Sir Vince Cable, leader of the Liberal Democrats, said: “This is very reminiscent of the dangerous times of a decade ago when banks and building societies were lending far beyond reasonable limits.”
Banks are not allowed to hand out more than 15% of their total lending to mortgage customers wanting to borrow over four-and-a-half times income. The Bank’s concern is the sharp rise in lending at just under this level.
We all know what is causing this. Concerns over Brexit and constant government turmoil (including snap elections) are worrying many members of the public.
Worried people put ‘getting on with their lives’ on hold, so therefore many properties that would have been coming to market aren’t. People are taking a ‘let’s wait and see attitude’.
Further, other people that want to move, can’t see anything available that they would want to move to….so they are not putting their houses on the market.
This is causing a self fulfilling downward spiral of supply whilst demand is still high…..creating the price rises.
The answer is simple…..the government need to put some temporary stimulus in to increase the supply side. My suggestion would be a stamp duty reduction for transactions up to a certain level…with perhaps no stamp duty at all for downsizers.
Anybody else have other suggestions?
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Sorry, but where are asking prices reaching a record high?? I’m not seeing this.
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West Midlands Paul…….where are you?
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London. Prices dropped 15% on the day the UK opted to leave to EU, so nothing has recovered, if anything it’s worse. That’s agreed sales prices, asking prices are frankly aren’t much of a yard stick tbf
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House prices dropping in south west. Loads overpriced just not selling, so maybe RM gleaning data from unrealistically priced stock? I suspect house price growth continuing in Midlands to North as historically always behind the trend of South.
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Dear Government… “Get on with Brexit, Get an effective deal done, Stop muddling along like Large footed Clowns flocking to a Clown Shop on a “Buy 1 Red Nose get 2 Red Noses Free” Promotion Day!”.
Our country remains paralysed in many business areas because of Brexit uncertainty. Unless Mrs May & Co get a grip, the housing market will continue to suffer, as retail will suffer, tourism will suffer ……I don’t need to list further as this mess is affecting the entire UK.
I didn’t vote for Brexit however it is what it is…. and it is strangling our economy in many ways. Lack of consumer confidence is affecting the property market so the government needs to stop creating problems, then highlighting those problems as if we created them, and then creating further uncertainty by hinting that they will need to solve those problems that they created? ….. by kicking the consumer/public!
……and no, I have Zero interest in any particular Politics, I just want a Happy/Prosperous/Stable UK …..like the steadily recovering one we had pre Brexit Fiasco!
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One should not lose sight of the fact consumer debt is fast approaching levels seen in 2007, combined with a car finance sub prime market issue, throw into this the badly advised Help to Buy scheme, which has fundamentally helped thousands of people who could not afford to buy a house, to buy one. We are at year 5 for the first loans of HTB, meaning interest in now due, rising incrementally year on year, people are going to be squeezed even more. Those HTB homeowners trying to remortgage are finding limited product in the market place as lenders are less inclined to lend to these borrowers, throw in a default on payment and its nigh on impossible, leaving these owners paying higher interest rates once fixed rates expire. The economic picture is one of consumers turning the tide on the spending spree based upon cheap money over the last 8 years…..This is not a Brexit issue, this is far bigger than Brexit. Unfortunately.
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But fear and uncertainty make the problems far worse as GPL said.
Perhaps what we really need is politicians whose pay is affected by the decisions they make. In business everything they do affects our chances of just surviving, let alone what we get paid…..but they still get the same wage month after month regardless of what they are doing to affect the state of the economy around them!
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You make a good point.
Whilst we have ‘career politicians’ nothing will ever change, they are only ever interested in ‘winning the vote’. Find me a politician that thinks otherwise. Our antiquated political system requires huge overhaul….
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Something needs to be done to prevent articles such as this which refer to a “national” picture as far as house prices and the market is concerned.
As agents in London and the South East battle against over ambitious vendor ecpectation and falling prices, the last thing they need are reports like this which just add more fuel to the fire.
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Winds in the east, mist coming in,
Like somethin’ is brewin’ and ‘bout to begin.
Can’t put me finger on what lies in store,
But I fear what’s to happen all happened before.
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The fact that there have been 3 weekends compared to 2 this time last March accounts for about 8000 listings which is more than 5%. Some pretty bad weather too.
Such articles and comments from Rightmove are irresponsible.
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Over valuations are up as stock levels are down. Selling prices are down, selling times are up. I try not to let it get me down.
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