The Rightmove House Price Index for May was released this week and shows a stabilisation of prices, with no monthly change. This is the first time that there has not been a price rise since the Index was started. The Index reflects an annual price increase of 2.0% with the average property asking price at £243,759.
New listings are down 10% in May from April, as concerns are raised that there will be a longer than normal summer lull as a result of the Jubilee, Euro 2012 football and the Olympics.
Miles Shipside, Rightmove director comments:
“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. The high rainfall in May will have been a further factor in dampening prospective buyers’ enthusiasm to get out and view property, and even if the forecast picks up we have a summer of sport and celebration ahead that will provide further distractions.”
“The post-stamp duty holiday lull in first-time buyers, and the upward chains they help to build, appears to have made the market pause for breath, taking the wind out of spring market sales a little earlier than usual.”
Mr Shipside also commented on the Eurozone issues which are threatening economic stability as speculation increases over Greece exiting the Euro, and Spanish banks seeing their credit rating cut. He said “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. 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.”
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