Rightmove: Asking prices up 1.2% in May

The average asking prices for a property in England and Wales increased by some 1.2 per cent in May, according to the latest house price index from RightMove.co.uk.

In research released today by the online property portal, the organisation finds the annual increase in asking prices has recovered to 2.2 per cent.

This is up from 1.3 per cent in April.

However, this does not mark the return a positive market, according to RightMove. Instead the organisation argues 'discretionary spring sellers' of larger properties in the south of England have pushed up average national prices.

The south-east of England saw asking prices increase by 4.2 per cent in May.

This has masked year-on-year falls in six out of ten regions in England and Wales.

For example, annual price growth in the north-west has turned negative, with prices down 2.5 per cent over the last year, while the north-east and Yorkshire & the Humber have seen dips of 0.4 and 2.3 per cent respectively.

Nonetheless, average asking prices of newly marketed property increase by £2,879 during the month, hitting a new record of £242,500.

It is important to remember, however, the RightMove index merely measures asking prices, and offers no account of the final price of completed property transactions.

RightMove also finds a lack of understanding in the market is preventing a full-scale correction from taking place.

"New sellers can see the storm clouds overhead but seem to believe it's only raining on other people. The reality is it started raining last September, and has reached storm force in the last month," explained Miles Shipside, commercial director of RightMove.

"The free-flowing mortgage tap has been turned off. Sellers who are hanging out to achieve last year’s prices need to accept that the market has fallen and that they will end up being punished by a lower price in the long run."

The long-term slowdown in the market is attributed to the restrictions on lending now in place following the credit crunch.

With borrowers unable to secure funds for property purchases, demand has fallen, while supply remains stable.

"Lenders are looking after number one by raising mortgage arrangement fees, monthly repayments and deposit requirements, and the amount they are prepared to lend is falling," continued Mr Shipside.

"Sellers therefore need to act in a more coordinated way to help improve affordability throughout the chain. However, there are thousands of estate agents and hundreds of thousands of sellers, so reaction to a deteriorating market is a slow process."

Finally, RightMove finds the average unsold property stock per estate agency branch has jumped to a new record figure, rising from to 73 from 69; the highest ever figure since records began in August 2002.

The previous high was 72 properties in August 2005.

"Some estate agents are now turning away new instructions if they are similar to the properties they already have on their books and cannot sell," concluded Mr Shipside.

"This is a major cultural change for most estate agents, but those with experience of previous downturns recognise there are big costs in burdening yourself with even more over-priced stock."

Chris O'Toole