Cash investors fuel property price boom

New records have been set in UK house prices, Rightmove reported today.

 The average asking price of a property new on the market has tipped £250,000 for the first time.

According to Rightmove, new sellers have bumped up their asking prices by 2.1% over the last month, The highest asking price previously was last June when it hit £246,235, and before that in May 2008 when it reached £242,500.

The fifth consecutive monthly rise means that overall, national average asking prices are now 5.1% higher than at the start of the year.

 Rightmove said this was the “strongest price start” to a year since 2004.

The site itself has also seen record traffic, with 1.25 billion pages viewed in April, a 20% rise on last year. However, buyers have less stock to look at, with new instructions this year down 3%.

The turn-around appears to be almost totally south-based and fuelled by cash property investors who are buying buy to let property. They have plenty of cash and little need of mortgages.

“Despite a new national record, it’s not ‘green shoots of recovery’ across the board, especially for the deposit-strapped mass-market. They must wait patiently until January when the Help to Buy scheme extends to the resale market.”

 According to Rightmove, only two regions have asking prices which have slipped back on last year – Yorkshire & Humberside, and the East Midlands, where they are down 1.1% and 0.6% respectively.

In some regions, the South-West and North-West, asking prices are more or less static, having gone up by 0.1% and 0.6% respectively.

The average asking price on Rightmove at £249,841 compares with the far lower ‘sold’ prices being quoted by Halifax and Nationwide, currently £166,094 and £165,586 respectively.

Buy To Let investors ‘are piling into the market’

Rightmove issued a statement last week saying: “Asking prices for properties new to the market have shot up to hit an all-time record high for March, boosted by buy-to-let investors “piling into the market” with new asking prices 1.7% higher than last month. 
Asking prices are now 1.2% higher than this time last year.”

Miles Shipside, Rightmove director, said:

“Even those who truly believe that the market has turned a corner may be unable to do anything about it due to lenders’ cautious risk profiling, a significant factor limiting the speed and strength of the recovery.

“However, with new sellers asking more than ever before as we enter the traditionally busy spring market, and an expectation among home-movers of price stability or growth, there is now a bedrock upon which confidence and momentum appear to be building.”

Rightmove also said that the average time on the market has fallen from 90 days last year to 80.

 Shipside added: “Whilst it is too early in the year to make estimates about full year transaction volumes, agents are reporting more properties being sold subject to contract.

 However, these prospective buyers still have to complete the potentially treacherous journey through to successful completion. 

More limited inventory for sale by agents means less choice for buyers and is usually a forerunner of increased property prices.

  Shipside said that there are currently “blindingly” good returns on the right buy-to-let investment, and that investors are “piling” into the market as a result. Property investors can get a much better deal than putting money into a bank.”