The latest data and analysis from Rightmove has revealed that annual house price growth increased marginally during February. The 0.2% rise was the lowest recorded at this time of year since 2009.
The marginal increase in house prices, combined with average wage growth running at an annual rate of 3.4%, has resulted in affordability for prospective buyers improving at the fastest rate against average new seller asking prices since 2011.
According to Rightmove, new sellers in all northerly regions, including the Midlands, are now able to ask for modest increases compared with a year ago.
Six of these seven regions are seeing annual asking price growth in excess of 2%, with Yorkshire & the Humber as the highest riser at 3.6%. Scotland is the poorest performer year-on-year, but new seller asking prices are still 1.6% higher.
In contrast, all southern regions fall below that figure, with three having average prices cheaper than a year ago: London with a fall of 2.1%, the South East at -1.4%, and the East of England with a smaller drop of 0.2%.
As a result, buyers have more fresh-to-the-market choice in all northern regions bar Wales, whilst all southern regions are seeing hesitancy to come to market with fewer new sellers than at this time a year ago.
The number of sales agreed by agents in January was 4% behind the previous January, with Rightmove saying it will “take some time” for improved buyer affordability to work its way through to more activity.
Miles Shipside, Rightmove director and housing market analyst, commented: “Sellers’ subdued pricing is now being outstripped by higher average wage growth, meaning that buyer affordability is on the rise at the fastest rate in nearly eight years. Buyers are also being given the leg-up by cheap mortgage rates, if they can meet lenders’ criteria and lay their hands on a large enough deposit.
In theory the scene would be set for an active spring if it were not for the uncertain political backdrop. As it is, the extent of that activity will depend on the degree of hesitancy among sellers to try to sell and be realistic on price, and buyers overcoming short-term uncertainty and taking a medium-term view that this is a good time to buy. As always, those decisions will also be influenced by local market dynamics.
Prospective buyers in three of the four southern regions are seeing new seller asking prices cheaper than a year ago, indicating that buyers have the upper hand over sellers when it comes to negotiating a price. This has obviously been a factor for some owners in those regions deciding not to come to market. Market conditions are more favourable for sellers further north though agents say that it’s still a very price-sensitive market where asking too much at the outset scares off buyers.”