Rightmove reports that average asking prices rose by 1.5% (£3,381) in February, as the spring market strengthened and shrugged off fears of another interest rate rise. The increase provides further evidence of the resilience of the housing market, with buyers continuing to trade in spite of new record price levels, three interest rate rises and the threat of another in the pipeline. It now appears the continued shortage of supply has more than compensated for the impact of the January rate rise. Compared to a year ago, buyers face prices that are £24,784 higher, an annual increase of 12.2%, up from 11.5% in February.
Miles Shipside, Commercial Director of Rightmove comments: "With supply shortages rapidly overtaking the effect of interest rate rises, we reiterate our view that moderating house price growth in the long term is dependent on building more homes where people want to live. As we have seen recently, raising interest rates can be used to influence the direction of prices in the short term but do very little to address the underlying cause of house price inflation. Crucially they cannot address the increasing demand for housing driven by the needs of a growing population".
Increasingly hard pressed first time buyers traditionally look to the budget for some relief from the growing tax burdens of house purchase. Analysis of Rightmove's database of 635,000 properties currently advertised on the site (representing over 80% of all properties for sale) shows that only 16% are priced below the £125,000 starting threshold for Stamp Duty. A further 32% are potentially liable to pay the higher rate thresholds of 3% or more, as they are priced above £250,000. In the current market, with demand exceeding supply in many parts of the country, any respite for first time buyers such as increases of stamp duty thresholds are likely to be rapidly lost as it fuels the ability of sellers to increases prices further.
The only likely respite in the short term could be a surge of new property to the market as sellers move to beat the Home Information Pack requirement deadline of June 1st.
