Over the last year there has been nothing but good news with regards to the UK property market as a lack of quality housing has pushed prices higher and higher. There have been major concerns that the UK property market was headed for a house price bubble although a report from Halifax today seems to indicate that sellers are returning to the market looking to take advantage of relatively high prices.
On the surface it looks as though the UK property market is continuing to go from strength to strength with a 0.7% increase in prices during October. This compares to an annual rate of 6.9% which has seen the average house price in the UK moving to around £172,000. So, will sellers take the froth off the UK property market?
Will sellers return in numbers?
When you bear in mind the strength of the UK property market over the last 12 months compared to the relatively benign economic situation, perhaps sellers are now looking to cash in their chips. There have been a number of issues which have pushed the UK property market higher which include a lack of sellers, excessive demand and the Help to Buy scheme launched by the UK government.
There were concerns that property owners in the UK would remain on the sidelines for the foreseeable future which would starve the market of natural selling stock and lead to a price squeeze. However, this week’s report from the Halifax confirms that tentatively there has been an increase in the number of sellers looking to take advantage of current market strength. So, what impact will this have on the wider UK property market?
Quote from PropertyForum.com : “While the London property market continues to go from strength to strength, it seems as though more and more investors are now looking outside of the capital.”
As we touched on in one of our recent articles, there has been an increase in the number of properties obtaining full asking price over the last six months or so. This was mostly due to the lack of quality property available and now that this issue is slowly being resolved, with natural stock coming to the market, there is every chance that buyers may look to negotiate better terms and the percentage of sales going through at the full asking price should fall.
This relative trickle of new sellers to the UK property market could lead to a significant wave in due course if homeowners balance their personal financial situation against a possible slowdown in house price rises. We are unlikely to see a major correction in the UK property market in the short to medium term because in theory this increase in possible sellers has probably come at the right time. Whether or not you believe the UK market was on the verge of a large scale house price bubble is neither he nor there because the natural increase in supply, expected when markets are strong, seems to be emerging.
It will be interesting to see how many sellers come out of the woodwork amid signs that the UK property market rise may well be slowing. When you also take into account the eventual ending of the government’s Help to Buy scheme over the next couple of years, we could be entering a very different leg of the cycle for UK property. It will be interesting to see how property prices perform over the next six months and indeed whether the number of sellers continues to grow or a short-term dip in prices flushes out yet more buyers.