Residential property asking prices in England and Wales remained unchanged last month, the first time they have been stagnant in 11 years, the latest data from Rightmove shows.
The average asking price of property coming to the market was £243,759, up just £22 or 0% on last month and is due to more people wanting to move to smaller properties.
Some 40% of sellers are looking to trade down, but only 25% hope to trade up. Rightmove said that this downsizing trend is putting a cap on house price rises and overall the market is likely to remain subdued in 2012 as new listings have fallen 10% in May compared to April.
Five regions covered by the Rightmove index saw prices fall and five saw prices rise. Prices were up 1.9% month on month in Yorkshire and Humberside, but are just 0.4% up on a year ago. They increased by 1.8% in the East Midlands but are down 1.4% year on year and were up 1.5% in the West Midlands but are down 0.2% compared to a year ago. In Wales they are up 1.3% but 2% lower than a year ago.
And in London they increased 0.9% but are up 8.9% compared with a year ago. Indeed London is the only region where prices are not expected to stagnate due to the high concentration of equity rich buyers, many of them foreigners seeking a safe haven investment.
The steepest fall in asking prices was in the South West, down 2% month on month but in this region they are still 1.2% up on a year ago. The North West saw a fall of 1.9% and they are 1.1% below a year ago. In the North prices were down 1.1% and they are now 3.7% below last year. The South East has seen a fall of 0.8% and prices are down 1.6% annually. And in East Anglia prices were down 0.1% and down 1.4% annually.
‘It is a cause for concern that the market appears to have lost its spring momentum, as there is likely to be a longer than normal summer slowdown too thanks to the extra distractions of the Jubilee and two major sporting events,’ said Miles Shipside, director of Rightmove.
‘New sellers asking more in May had become the norm, so it comes as quite a shock to see prices flat at this time of year. Perhaps the first time buyer stamp duty holiday, and the knock on activity it helped to create, has concertinaed the market’s stronger than expected early spring momentum into the first four months of the year rather than the usual six,’ explained Shipside.
There are also concerns about Eurozone issues that potentially threaten economic stability, mortgage market liquidity and housing market sentiment.
‘If Greece defaults then the knock on effects could be a further reduction in mortgage availability and weakening consumer sentiment causing even more potential buyers to sit on their hands. With overall market volumes already in the doldrums, we need a fair and consistent wind of mortgage lending to prompt a speedier housing market recovery,’ explained Shipside.
‘Ironically, London property could become an even more popular safe harbour for foreign cash in stormy times, further widening the gulf between the capital and the rest of the country,’ he added.