Rightmove has reported the smallest drop since 2011 in new seller asking prices (-1.3%) during the seasonal November slowdown, which it believes is indicative of even higher prices next year.
The firm says its research reveals home-owners have a confident property outlook for 2016. 85% of home-owners expect their financial situation to get better (41%) or stay the same (44%) over the next year, unfazed by the risk of higher interest rates.
Meanwhile, seven in 10 home-owners think house prices will be more expensive in the next 12 months, despite an average increase of 6.2% (+£16,969) in the past year.
Miles Shipside, Rightmove director, said: “New-to-the-market sellers have dropped their asking prices at this time of year for the last eight years, with an average drop of 1.9% over the last five years. Those looking to market their property as Christmas gets closer often have a greater sense of urgency to find a buyer and sensibly recognise that trimming their asking price will provide an incentive to potential buyers more focussed on seasonal Christmas trimmings.
“Buoyant market conditions and a confident outlook for 2016 mean that the reduction, while no-doubt welcome to hard-pressed buyers, is the most Scrooge-like since 2011! It’s likely to be a short-lived respite as the combination of high confidence and low interest rates is a recipe for higher prices next year.”
Rightmove research, with a sample size of over 23,000, reveals that the majority (85%) don’t think their financial situation will worsen in the next year. Despite the possibility of a 2016 rate rise that could increase mortgage repayments for many, 41% of home-owners said they thought their household’s financial situation would get better over the next 12 months. Another 44% said things would stay the same, with only 15% forecasting they would get worse. The majority (69%) were also of the opinion that property would continue to rise in price over the next 12 months, with only 7% expecting prices to be lower.
Shipside said: “While confidence can be fragile, it is currently riding high. It seems that most home-owners are not worried by the risk of 2016 rate rises, with only one in seven thinking their financial situation will deteriorate. Home- owners have had a smooth ride over the past six or so years with a half-a-percent base rate, so you would think that more might have concerns about the extra drain on their financial resources when the base rate inevitably goes up. Whether in 2016 or early 2017, a rise won’t come as a surprise as an increase has been well-trailed.
“Indeed, competitiveness among lenders means some of the possible effects of rate rises for both home-owners and movers will be softened, and buyers’ ability to afford higher interest rates is already built into the current tighter lending criteria. Many recent buyers will also be shielded as they are locked into fixed rates, so the shock of the first rise for over six years will be a delayed one.”