Most people just assume that owning a house is just an inevitable part of life. However, according to new research properties are becoming even less affordable than they were five years ago when the prices peaked in 2007. This is because property prices are rising with inflation, whilst wages are largely frozen.
The average price of a house that is coming onto the market is now £246,235. This is a 1 per cent increase month on month; however, London is the only region round the country to have “outpaced inflation” over the last five years.
The three weeks before the Diamond Jubilee were the busiest of the year so far, which saw 300,000 new homes coming to the market. This was the highest rate in two years which suggests that over the coming month’s house prices should fall due to increased competition amongst sellers.
The report indicates that buyer activity will decrease though as there is uncertainty in the Eurozone and the Greek elections having just taken place.
For the last three months in a row asking prices for properties rose to record highs. Seller’s prices are currently up by 2 per cent compared to those in August 2007 but after the retail prices index inflation is considered then prices have actually fallen by 13 per cent.
London has seen an asking price increase by 3 per cent after inflation and is the only region recognised in the report that covers England and Wales, which has seen an increase. Asking prices in London are £477,440.
Although prices in the South East have risen to £318,717 they are still 11 per cent lower than they were in August 2007, just before the run on Northern Rock.
Wales have seen the greatest decline by 24 per cent in asking prices and the average now stands at £167,875.
Miles Shipside who is the director at Rightmove said, “The better properties in the better areas remain in short supply, giving sellers of sought-after stock, and their agents, the confidence to come to market at a higher price.
“The right property within commuting or holiday bolt-hole distance of the capital seems to be an attractive each-way bet with the potential to be both recession-proof and offer good odds to keep pace with, or even outstrip, inflation.”
If you are a landlord thinking about selling one of your properties, now may not be the time to do this as the report indicates that sellers are still worse off than five years ago. The best thing to do would be to keep renting the property as the rental market is very competitive and there is a lot of demand for good quality homes. Make sure you have a landlords insurance policy to keep you protected and when prices are getting better for sellers, then would be the time to sell.
Mr Shipside said that the current house prices would have been great for buyers but as wages didn’t increase with inflation this makes properties unaffordable for most potential buyers meaning the rental market is still very profitable.
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