Asking Prices For UK Properties Fall £5000 in One Month
A combination of presumed Brexit uncertainty and a more general trend to the property market cooling in several regions of the UK means that investment properties, or homes that will be a primary residence, can be acquired at an average £5000 discount compared to asking prices in October. The data is based on a survey conducted by property portal Rightmove and while it may not be good news for sellers, the correction is likely to be met with positivity from especially first time buyers and investors on the lookout for a bargain.
The drop in asking prices equates to 1.7% and brings the average advertised price of UK residential property down to £302, 023. The slump does have to be taken within the context that asking prices are traditionally shaved in the lead up to Christmas as sellers look to lock in a deal before the festive period kills the market for a period. However, this year the move to price properties more realistically has come earlier than usual and the extent of the discounts is also magnified.
While the dip in asking prices can be seen across the length and breadth of the UK, the slump has been deepest in the South East, where asking prices have fallen 2.1% between October and November. That adds up to a saving of around £8647. Enough to add up to the equivalent of a few months-worth of rental income generated by investment properties. In London itself the drop has been 1.7%, the equivalent to an average of £10,793.
Areas where prices are falling fastest are proving to be those where the upwards trend in house prices since 2011 was steepest. London commuter-belt towns such as Hertfordshire’s Rickmansworth, Surrey’s Esher and Buckinghamshire’s Gerrards Cross all saw price rises of around 40% between 2011 and early this year. Over the last month the three locales have seen asking prices drop by a whopping 7.1%, 6.4% and 6.1% respectively, demonstrating a reverse of the ripple effect out of the capital that started seven years ago and quickly gathered pace.
The recent drop means the first year-on-year slide in the UK-wide property prices since 2011. Newly marketed properties are now at an average of 0.2% less, £607, compared to this time last year. However, despite the dip property investors and home owners are not thought to have anything serious to worry about. Solid property market fundamentals such as tight demand to supply dynamics and rising interest rates should mean any correction is a relatively painless one.
However, many experts also believe the long bull run for UK property prices, a trend that has now held for over 3 decades, may also be over. The unique combination of conditions that brought it about, such as the growing affluence of the post-war ‘baby boomers’ generation and the generation that followed them and a quickly growing population appear to be running out of fuel. Record low interest rates over the past decade created one last surge but many think the affordability ceiling has now been reached, with the tax environment also becoming less favourable to those who own investment properties and second homes. This leaves much less room for price big future property price jumps over the foreseeable future and will mean a more rental-return focused business model for investment properties.
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