Recent figures from property portal Rightmove show the average asking property price has reached an all-time high so far in May, with the average price currently sitting at £333,564.
We explore what the data shows and what could be behind this record average property asking price.
What does the data say?
As shown by data from Rightmove, the current average property asking price has reached a record high of £333,564, having increased 1.8% from April. April saw the average asking price reach an all-time high until this month when a new record was set.
Certain regions saw higher increases, with Wales seeing the highest increase at 13%. After Wales, the next two regions with the highest increases are the North West and Yorkshire & the Humber, at 11.1% and 10.5% respectively.
Since March 2020, London has seen the smallest increase in asking price at only 0.2%, but still have average property prices 2.9 times higher than northern areas. Despite London’s prices being almost three times higher than northern areas, this ratio is actually the smallest it has been since 2013 as recorded by Rightmove.
The graph from Rightmove below shows the average asking price trend where it can be seen from January to May 2021, the average asking price has jumped massively, suggesting the trend is only going to continue in an upward direction.
Why are asking prices increasing faster in the North?
Since the Stamp Duty Holiday was implemented, the property market saw people flock to the market, pushing demand to extreme heights. In the North, the demand has greatly outweighed the supply, as the number of properties coming up for sale has stayed at the same level.
In London, demand and supply have been almost equal, which can explain why the price increase between March 2020 and May 2021 is so low compared to other areas of the country.
The main property demand is for family homes with three or more bedrooms, but these are becoming increasingly harder to find, with stock in April 2021 down 50% compared to the same period of 2019. This hasn’t been compared to April 2020 as the property market was completely shut during this time.
Also, availability for properties with two bedrooms or fewer is down 24%, further emphasising the gap between supply and demand.
Whilst the Stamp Duty Holiday was the original cause of keeping the market ‘afloat’, the demand has continued at a high level almost a year on from it being implemented and doesn’t look like slowing down, despite the holiday due to begin its winding down in a month or so.
What has been said about this data?
Tim Bannister, Rightmove’s director of property data, comments: “Last year’s unexpected mini-boom is rolling on into 2021, with new price and market activity records again defying many predictions. Buyer affordability is increasingly stretched, but there’s obviously some elasticity left to stretch a bit more as many buyers are squeezing their way into higher price bands.
“This high demand, with both willingness and ability to pay more, has pushed the average price of property coming to market to a new all-time high of a third of a million pounds. In another twist, it is the regions of Britain further north that are leading the way, with some degree of catching up between average prices in London and the north.
“While the gap remains very large, with average prices in London still 2.9 times higher than those in the north, this ratio is now at its smallest since 2013. The pandemic has given a greater focus on the home, and in 2020 we saw a surge in southern coastal and rural areas.
“So far 2021 is proving to be the year of the northern mover, not only satisfying their pent-up housing needs, but in doing so also narrowing some of the huge price gap with London.
“Another important factor driving the higher demand and quicker average time to sell in the north is that more of their sellers are intending to buy and stay local, whereas many Londoners are looking to move out.”
Rightmove research among those intending to sell in the next 12 months shows that an average of 84% in the north are looking to move locally, compared to only 52% in London.
This difference highlights the pandemics effect on people’s priorities within their homes, as we reported the ‘lockdown effect’ has caused people to realise they should spend more on their homes, with an increased demand for more space both internally and externally.
This increasing trend doesn’t look to be slowing down anytime soon, which begs the question will asking prices become too high that demand begins to drop, causing a crash in the market? Or will the high asking prices lead to more people wanting to sell their house, meaning less of a mismatch between demand and supply?