House prices are set to increase far faster than first thought, according to Britain’s biggest online property site.
Rightmove, which advertises thousands of properties across the UK, said it was uprating its forecast for annual house price inflation from 4.5 per cent to 6 per cent with a vigorous autumn in the UK property market expected.
The decision will add further weight to the argument of Business Secretary Vince Cable that the UK property market could be in danger of overheating and that interest rates may have to rise sooner rather than later.
However, Mr Cable’s analysis is disputed by his own party leader, Nick Clegg, who insists the market is not about to experience a ‘bubble’.
Miles Shipside, Rightmove director and housing market analyst, said: “While prices fell in the month overall, the last couple of weeks have seen the start of a turnaround as more sellers choose to come to market and pitch at higher prices as momentum rebuilds”. He said the fact that the site has raised its estimate for price growth for the year to 6 per cent is partly driven by the strength of southern markets but with a nod to the increasing growth contribution by the more buoyant areas of the north. Rightmove’s bold message on prices came despite a slight slip in asking prices of 1.5 per cent in the past month, leaving the average property on the market at £245,495.
He noted an improvement in in buyer demand that has not been matched by seller activity, leaving a shortage of new property stock that is likely to lead to an autumn surge in some sectors of the property market.
“New seller activity has fallen again this month and the lower volumes of property coming to market over the summer have resulted in price drops that seem counter-intuitive given that buyer demand is holding up,” he said. “Improving buyer activity appears to have become even further out of sync with sellers’ appetite to come to market during the summer heatwave.”
He added that “many potential sellers require green stalks of recovery rather than just green shoots” before entering the market”.
However, Mr Shipside predicted the coming months could be a good time for sellers to trade up. “Potential sellers should note there is the possibility of this autumn’s market being a better time to sell than 2014 if you are trading up. The price gap to trade up might be smaller now and there may be more competition from other sellers next year if January’s second phase of Help to Buy unlocks the housing market”.
But a rival survey from estate agent Haart published today suggests the time is also right for first-time buyers. Chief executive Paul Smith said: “This is the best first-time buyers have had it since the economic crash.”
His enthusiasm is based on the agent’s monthly housing monitor, which shows the number of first-time buyers has increased 75.7 per cent in the last year. In London, the figure has more than doubled, up 102.4 per cent.
A further positive sign for hopeful homebuyers is that first-time buyer house prices have fallen 1.4 per cent over the year to an average £144,350.