Research from Rightmove reveals that average house prices in the UK have reached a record high – Tepilo explains why this represents good news for sellers.
Despite ongoing uncertainty over Brexit and June’s upcoming snap general election, house prices in the UK continue to rise.
The latest index from property website Rightmove shows that average asking prices for UK homes hit a record high in the last month, increasing by 1.2% in the four weeks to 13 May 2017 to reach a new peak of £317,281.
Driving these price rises are families with children under the age of 11, who were twice as likely as the average person to be moving home between April and May, eager to find larger properties in the catchment areas of good or outstanding schools. As a result, asking prices for typical family homes – with three or four bedrooms, but not detached – increased by 5.4% year-on-year in the last month. They now stand at £270,953.
This suggests that families are the most willing to brush aside election and Brexit uncertainty and take decisive action regardless. The shorter nature of the election campaign, the resilience of house prices and the positive way in which the property market dealt with the EU referendum in 2016 and the previous general election in 2015 have all helped to keep consumer confidence high, with high demand further reflecting this.
Part of the reason why families with young children may be more willing to act than most is a greater need to move – either because a house is too small for a family’s needs, because they need to be closer to the school their child is attending or because they want to move into a school’s catchment area before the start of the new academic term in September. While people are nowadays willing to commute further to drop kids off, this isn’t an ideal scenario and parents would prefer it if the school commute is kept to a minimum.
The pressure to move, whether for a bigger abode or proximity to a high-performing school, is outweighing any Brexit or election worries and is therefore keeping demand high in the family homes market.
The latest rise in average prices was nothing new, either. Overall average asking prices have now risen for five successive months, with a price increase of 1.1% between March and April and up again between April and May. Momentum has not been dampened by the triggering of Article 50, the ongoing concerns over Brexit or the unexpected calling of a second general election in two years. In fact, year-to-year sales agreed are currently 2% higher than 2015, when the last election took place.
Circumstances – such as catering for a growing family with a larger home - are influencing home buyers, not political and economic factors, according to Rightmove’s latest findings. For many buyers, it’s simply a case of keeping calm and carrying on.
As Brian Murphy, the Mortgage Advice Bureau’s head of lending, says: “It would seem that this month’s report points to the majority of movers being nonplussed about the election, with their moving plans being driven by circumstantial factors that can’t wait.”
He added: “The data from Rightmove does tally with Mortgage Advice Bureau’s observations of the market in April with regards written business, which saw one of the busiest weeks on record at the latter end of the month, underpinning consumer confidence.”
Nonetheless, the performance of the housing market in the second half of the year is less clear-cut, with it still being unclear who will lead the country after June 8. Rising inflation coupled with stalling or falling wages is likely to squeeze household incomes for many, with leading economists believing this could lead to reluctance on the part of buyers to commit to major purchases. In the last week it was revealed that real wages in the UK are falling while prices rise, with inflation expected to keep increasing in the coming months. It was the first time wage growth had lagged behind inflation since the middle of 2014 and has caused worries about an increased cost of living at a time when household budgets are compromised.
There is no knowing for sure what impact this will have on the property market’s upward momentum, with concerns that demand might start to fall away as household budgets become more stretched and affordability issues come into play. However, record low interest rates means there has never been a better time to borrow money and, in an increasingly competitive marketplace, more lenders are targeting their products towards certain buyers, in particular first-time purchasers and families. This could help to keep demand – and house price growth – high.
Rightmove’s latest findings are, of course, good news for sellers who will be eager to secure the asking price or above for their property. With demand high and average prices rising, you should feel confident about getting the best possible price for your home. If you are targeting your home towards families with young children, the findings above will be even great cause for cheer.