House sellers are finding they have less “pricing power” than usual for this time of year – with those putting their homes on the market making the smallest new year increases to price tags seen for seven years.
There are also signs that house sellers in southern England are feeling less confident about pegging their prices towards the upper end of their expectations than those further north – where asking prices saw bigger jumps in January, website Rightmove reported.
Across Britain, average asking prices increased by 0.4% or £1,207 in January – the smallest uplift for this month since 2012 – Rightmove said.
The typical price tag on a home is now £298,734, with the national average being dragged down by “new-to-the-market sellers realising they have less pricing power than usual given the current market backdrop, especially in the south,” Rightmove said.
But it said that despite pricing caution, potential home-mover visits to its website were up by 5% on the comparable period a year ago.
The website has been seeing an average of over 4.5 million visits each day, indicating potential home movers are still searching in vast numbers, it said.
Miles Shipside, Rightmove director, said: “Given the current market backdrop and ongoing political turmoil, it’s not surprising that the more challenging conditions in London and its nearby regions mean that they appear to have had a slower start to the year.
“Overall however, with Rightmove visits up by 5% on 2018 and at record levels for this time of year, it is encouraging that potential home movers are still searching in vast numbers.
“Traditionally this is the time of year when more movers look at a wider choice of fresh property supply and kick-start the market, and this year’s buyers have the added spur of the slowest rate of new year price increases for seven years.”
Rightmove said London and the south east have a strong influence on national average prices – as together they make up 30% of all new-to-the-market listings.
Three out of 11 nations or regions in Rightmove’s study saw asking prices fall month-on-month in January – Wales (by 1.9%), London (by 1.5%) and the east midlands (by 0.3%).
In the south east of England, house asking prices edged up slightly month-on-month by 0.2%.
In Scotland, asking prices increased by 0.1% month-on-month.
In northern England, there were indicators that house sellers were feeling more bullish.
The biggest month-on-month increase in asking prices in January was in the North West of England, at 2.6%, followed by the North East of England which saw a 1.8% uplift and Yorkshire and the Humber, where asking prices jumped by 1.3%.
Last week, the Royal Institution of Chartered Surveyors (Rics) said that surveyors’ expectations for house sales in the next few months are the most negative seen for 20 years.
Rics said that as well as Brexit uncertainty, domestic issues related to lack of supply and affordability continue to affect the market.
Mr Shipside continued: “Broadly speaking, buyer affordability and sentiment are in more positive territory in the north than in the south.
“But wherever you are looking to buy, mortgage rates are still at historically very cheap levels and lenders are competing hard to lend.
“In addition, sellers seem to recognise that they need to lower their price aspirations, and with an average of over 4.5 million visits to Rightmove each day many people appear to be contemplating a new year move.
“Mass market home movers have a track record of ignoring the politics and continuing to satisfy their housing needs, and as long as these fundamentals remain in place through this period of uncertainty, the market will keep moving.
“Indeed, in 2018 the number of sales agreed by estate agents was down by only 3% on 2017, an indicator of resilience and holding up much better than many had forecast.”
Rightmove also quoted the views of estate agents.
David Plumtree, Connells group estate agency chief executive, said: “2019 has started off in encouraging fashion in respect of market appraisals and instructions, both of which are ahead of the first two weeks of last year.
“As expected, we continue to see a shortage of buyers despite having more available stock, and this is more pronounced in London and the east.
“Brexit concerns are, of course, the cause for hesitancy amongst buyers and we don’t expect any change in this until we see some certainty.
“There remains a good deal of price reduction activity on unsold stock in order to stimulate interest from buyers and we expect to see very modest growth in average house prices in 2019.”
Will Watson, director of Watsons Residential in Nottinghamshire, said: “The market seems to be relatively healthy for first time buyers, at least up to the £200,000 mark.
“Anywhere past £250,000 and it’s getting more challenging, with lower activity.”