Rightmove has reported that the average price of newly marketed property increased by 1.3% (+£3,877) in March.
A larger monthly rise at this time of year has only been recorded once since 2007, which Rightmove claims is an indicator of the continuing resilience of the market. It also matches the monthly increase recorded in last year’s buy-to-let-boosted period.
However, Rightmove says that there are signs of a changing market however, and breaking with the tradition of the market often being driven by the northern or southern halves of the country, it is the two Midlands regions that clearly lead the way in both the monthly and annual price metrics.
Miles Shipside, Rightmove director, said: “Since the start of the decade, the average March price rise has been 0.9%, so this month’s 1.3% uplift is an indicator of a shortage of suitable property for sale in many parts of the country, with strong demand for the right property at the right price.
“Since 2007 we’ve only once seen a larger rise than this in March, and we are also keeping pace with last year’s rise, which had the added momentum of investors looking to beat the Stamp Duty tax deadline of April 1st.”
Rightmove said that while market fundamentals remain robust, the annual rate of increase in the price that new-to-the-market sellers are asking for their property remains modest at 2.3% for the second consecutive month. The prices set by house sellers and their estate agents are a leading indicator of market sentiment, and these figures demonstrate the slower pace of increases, the firm said. A year ago in March 2016 year-on-year prices rose at 7.6%, more than three times this rate.
Shipside explained: “While six consecutive years of price rises have been a gravy train for many home-owners, some of them are running into the buffers of affordability when they come to trade up. Meanwhile many would-be first-time buyers are being left waiting on the platform struggling to even get on board. Modest average wage rises and tighter lending criteria have limited buyers’ ability to pay more.
“While credit is cheap, if there are limits on its availability then the pace of rise has to slow even though demand for housing is high. Many buyers are being forced to be price-sensitive, so sellers have to be wary of over-pricing if they want to sell.”
The index reported other signs of changing dynamics as well, and while market trends often favour the north or the south, all of this month’s price indicators are clearly highlighting that it is the East and West Midlands that are outstripping all other regions. The fastest pace of price rises anywhere in the country compared to this time a year ago is in the East Midlands, up by 5.7% (+£10,801) year-on-year and 2.1% (+£4,205) this month. The price of property coming to the market in the East Midlands is at a record high, breaking through the £200,000 barrier for the first time to £200,620. The West Midlands region has the second highest annual increase with prices up 4.2% (+£8,658) and matches the East Midlands’ 2.1% monthly rise (+£4,321). The region with the next biggest year-on-year rise is the East of England at 3.9% (+£12,885), held back by a much more subdued 0.8% (+£2,712) monthly rise.
Shipside said: “The price-rise crown has shifted from its previous strongholds. The pace is no longer being set by the more affluent commuter-belt south, including London with its international appeal. Neither is it set by the cheaper north driven by a mass of investors swooping on high buy-to-let yields.
“As markets in other areas of the country become more mature and run out of price-rise steam and froth, the fundamentals of the Midlands have come to the fore. Accessibly and conveniently located in the middle of the country, the area offers mid-range and relatively affordable prices at an average of around £200,000, whilst also exhibiting local economic breadth and strength. As other parts of the country suffer from varied factors such as highly-stretched affordability, changes in sentiment and increased economic uncertainty, it is the Mighty Midlands that is the current powerhouse of price rises.”
Jeremy Duncombe, director of Legal & General Mortgage Club, added: “The measures announced in the recent White Paper were never going to have an instant impact on housing supply and therefore house prices, so it’s not surprising to see the cost of homeownership continue its upward climb.
“The White Paper was a good first step in addressing the housing crisis. However, now we have had a multitude of announcements, the time has come to see real action on the ground that addresses the ongoing supply-demand issue which continues to leave thousands of hopeful homeowners stuck in ‘Generation Rent’.”