MortgagesNov 16 2015

Rightmove brands house price slump ‘Scrooge-like’

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Rightmove brands house price slump ‘Scrooge-like’

This November has seen the smallest drop in new seller asking prices (minus 1.3 per cent) since 2011 during the seasonal slowdown, indicating even greater property prices next year.

Rightmove’s survey of 23,140 home-owners, carried out in July and August, also revealed that 85 per cent of home-owners expect their financial situation to get better (41 per cent) or stay the same (44 per cent) over the next year, seemingly unfazed by the risk of increased interest rates.

Seven in 10 home-owners think house prices will be more expensive in the next 12 months, despite an average increase of 6.2 per cent (£16,969) in the last year.

Given these findings, and the likelihood that demand will continue to outstrip supply, prices look set to increase again in many locations in 2016, according to the estate agent portal.

Rightmove’s director and housing market analyst Miles Shipside explained 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 per cent over the last five years.

“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.”

He continued that the base rate rise has been well-trailed, so will not come as a surprise to borrowers, whenever it eventually hits. “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.”

Simon Checkley, managing director of independent broker Private Finance, said that following the upward trend set by last month’s figures, this increase in house price growth is continuation of strong demand seen in the first half of 2015 and ongoing lack of supply.

“We are seeing a return in demand particularly at the top end of the market for country houses at £2m and above as well as sustained demand in the buy-to-let market.

“In spite of the planned tax changes to be brought in next year we are predicting that buy to let will still remain popular as even with the tax reforms in place, it will still remain a highly attractive and secure option for investors in today’s volatile markets.”