RTTNews - U.K. house prices rose for the fourth month in a row in May, a closely watched survey revealed Monday.
Driven by ambition, optimism and necessity, new sellers pushed up asking prices by 2.4% month-on-month in May to GBP 227,441 from GBP 222,077 in April, property website Rightmove said. This represents the largest percentage rise for the month of May since 2003, when property was seeing annual increases in excess of 15%.
On a yearly basis, house prices were down 6.2% in May, slower than the 7.3% decrease recorded in April.
Miles Shipside, commercial director at Rightmove stated, The long term worry is that the supply side of the housing market is now compromised for several years to come. Developers have shed much of their workforce so could struggle to increase capacity.
While new stock was in short supply, existing inventory of unsold stock remained high despite dropping to 71 from 72 per estate agency branch. This indicates high level of effectively unsalable stock and many of these sellers would be stuck in the equity immobility trap and therefore unable to reduce price further without compromising their ability to move.
The survey found that lenders were short of funds and more sensitive to risk, and denied movers access to their better mortgage deals unless there was a substantial deposit, often 25% plus.
Apart from first time buyers, there were three groups of existing property owners who were also affected by the squeeze on credit. They were equity releasers' who habitually withdrew cash during 2001-2008 re-mortgage spree and recent buyers' with no or low deposit, and now in or close to negative equity. The third group consists of equity losers' with up to 25% equity but needing more to trade up.
According to Rightmove, prospective buyers with nothing to sell are increasingly active, encouraged by 59,072 properties reducing asking prices by 2% or more in the last four weeks.
A survey from the Royal Institution of Chartered Surveyors or RICS revealed on May 12 that tentative signs of a pick-up in the UK housing activity became broad based in April, with 59.9% more surveyors reporting a fall than a rise in house price. The April level was the strongest since January 2008.
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