House prices up 3.2% due to property shortage

18 February 2008 / by Joy Tibbs
The average asking price for properties in England and Wales rose 3.2 per cent, or £7,426, in February, according to property agent Rightmove.

This has been linked to the dearth in available properties, with estate agents competing for just 132,000 properties compared with 144,000 in February 2007 and 155,000 in February 2006.

Average prices reached £237,856 in February compared with £230,428 in January, when prices fell 0.8 per cent. Compared with February 2007, the average asking price was 5.8 per cent higher, while January prices rose just 3.4 per cent year-on-year.

According to Rightmove, it is normal for asking prices to be higher at this time of year. "Most sellers obviously want to achieve as much as possible for their property, and traditionally they choose to test a more ambitious price early in the year as they have plenty of time to adjust it down later," says commercial director, Miles Shipside.

Meanwhile, new listings were at their lowest level since February 2005, prompting the rise in prices. The decline has been attributed to the December deadline for home information packs (HIPS), following which there have been fewer one and two bedroom properties on the market as people prove reluctant to pay the associated fees.

However, prices have actually remained fairly flat over the last eight months, with prices down just 0.6 per cent between June 2007 – before the introduction of HIPS – and February 2008. Rightmove predicts that prices will remain more or less static for the rest of the year.

Mr Shipside warns: "Fresh stock always creates initial interest when it is launched onto the market, and if the property is desirable you can get away with pitching the asking price a bit higher. However, if there are several similar unsold properties on the market nearby, then it can damage your long-term sale prospects as you lose the initial impetus of prospective buyers running their eye over its suitability.

"The market is now highly transparent with every property easily visible on the internet, so it’s very easy for prospective buyers to see what’s priced too high, what’s sticking and what’s a bargain."

Those looking for mortgage deals should be ultra careful as several major lenders, including Halifax and Cheltenham and Gloucester, have recently raised tracker rates. Lenders are now being accused of profiteering as prices continue to rise despite the two interest rate cuts in the last three months.

© Fair Investment Company Ltd