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Housing supply shortage shunts average asking prices to new high

Written by: Edward Murray
Property asking prices hit a record high and chalked up their fifth consecutive monthly rise in May, according to the latest Rightmove House Price Index.

Analysing the asking prices of over 110,000 properties put on the market in the four weeks to 13 May, Rightmove found the average of £317,281 was up by 1.2% on the previous month and 3% on May last year.

The rises were seen around the country and monthly asking prices were up in the North East (0.4%), Yorkshire and Humber (0.1%), the East Midlands (0.2%), the West Midlands (1.3%), Greater London (2.1%), the South East, (2%) and the South West (1.5%).

Asking prices in the East of England remained static on a monthly basis, while they fell back in Wales (-1.8%) and the North West (-0.1%).

The index found that typical family homes had seen the biggest price rise, recording a 5.4% year-on-year jump. It also highlighted the fact that the rises had come despite the uncertainty created by Brexit and the forthcoming general election. Rightmove said that year-to-date sales agreed were 2% higher than in the previous election year of 2015.

Miles Shipside, Rightmove director and housing market analyst, commented: “We normally see a high proportion of market activity in the first half of the year, and in spite of potentially disruptive events the established pattern is continuing. It remains to be seen how much momentum may drop away in the second half of the year with stretched affordability a problem for potential buyers, though competition among lenders who are keen to lend will help some to push their budgets higher.”

Commenting specifically on the strong performance of family homes, Shipside said: “Those with the greatest motivation to move are often those with growing families, with their need for space or access to schools outweighing uncertainties that might cause others to delay their future housing plans.”

David Westgate, chief executive of Andrews Property Group, said: “This month’s fifth consecutive rise in asking prices seen by Rightmove’s House Price Index is not surprising news, especially if you are currently house hunting. However, we are, along with other agents starting to see a slight cooling in some areas and readjustment in the market place.”

Jeremy Duncombe, director, Legal & General Mortgage Club, highlighted the ongoing issue of supply when he said: “Our housing market needs to be able to accommodate everyone and this will only be achievable if we tackle the root of the problem. Supply. Unsustainable house price rises will only be tempered by building more homes across a variety of tenures, over the whole of the UK.”

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