House Prices Increase By £5,000 In February
The property market is getting back into gear again with the usual stories of house price increases because of the chronic lack of available properties to buy. Prices jumped by £5,000 in February according to Right move bringing the average house price across Britain to £279,000. According to experts there is now the real possibility that the spike in prices could become normal at this time of year as the chronic shortage of available properties looks set to continue. In other words this could be the new norm.
If you go onto Right move and look at houses for sale in your area you will probably find that there is not a particularly good selection of homes for sale. This is not going to change anytime soon because we have not been building enough house for the last twenty years. That is the reason for the shortage plus the fact that the population has exploded and households are growing.
Rightmove received over 100 million visitors in February
We currently need to build 240,000 new homes every year and we are only building around half of that number. The figures for February would show that average annual increase for London would be in excess of 9% with the rest of Britain seeing an increase of 6.6%. January is normally a quiet time of the year as people return to work after the Christmas period. However Rightmove saw its busiest period ever in February with 100 million visits to its website.
It looks as though house prices are likely going to increase in the short term as we approach the busiest period of the year. Interest rates are still at record lows and prices have also been given a boost with the stamp duty changes. It is now considerably cheaper to buy a home than at any time over the last 15 years as the old stamp duty regime was ripped up and thrown away. First time buyers are now spending these savings by increasing their budgets and this is also going to push up prices in the short term.
Buyers will have much more competition for homes across Britain
There is also the fact that there is competition for houses and flats not just from first time buyers and people looking to get onto the housing ladder. There is fierce competition from buy to let investors and now we are going to see a new breed of buyers in April as pensioners will be able to spend their pension pots on property. We are going to see a surge in demand and this is also going to push up house prices. Pensioners will be in a very strong position as they will have bags of cash to buy property with. They will be able to go into an estate agent and say I have £250k in cash and I can buy that house next week. This will help prices along very nicely.
According to estate agents housing stock on their books was the lowest on record as sellers refrained from putting their homes up for sale because they were worried that they would not be able to buy a suitable property. This is also going to cause a blockage in the system and push up prices. According to Rightmove the number of new sellers coming to the marketing February fell by 4%. This is driving up prices as buyers snap up whatever is out there. The problem is more acute in the more affluent parts of the UK as can be seen from the graph below.