When we are growing up, we all assume we will move out in our 20’s and own a property. Nowadays, this is not the case and it is getting a lot harder. New research from Rightmove’s house price index has shown that house prices are even less affordable than they were five years ago in 2007. This is due to inflation; house prices have risen with inflation, wages haven’t.
Inflation
The study shows that house prices are at a record high, even though they aren’t as high as they were when they peaked in 2007, this is all due to inflation.
The last three months have seen asking prices rise to record highs. The prices are currently up by 2 per cent compared to August 2007. However, after the retail prices index inflation is taken into account, then asking prices are actually down by 13 per cent.
London has “outpaced inflation” and is the only region to do so across the country. The average price of a property coming into the market in this area is £477,440. The rest of the country shows that the average property price is £246,235. The latter figure is the result of a month on month increase of 1 per cent till June.
The busiest weeks of the year were the three leading up to the Diamond Jubilee. During these weeks there were 300,000 properties listed to be sold, this is the highest rate in nearly two years. As a result, this implies that over the course of the next few months prices should decrease as competition between sellers intensifies.
Even though more houses are waiting to be sold, experts believe that buyer activity will decline over the summer. This will be a result of the sporting events taking place; Euro 2012 and the Olympics. Potential buyers will be more inclined to watch these events rather than search for a property as many are happy to wait and see what happens to the market.
Renting
Many landlords are selling their properties at the moment to find some “quick cash” although now seems not to be the time to do this. The report suggests that the best thing for landlords would be to keep renting their properties as they won’t see a huge return from selling and as most people can’t afford to sell, most are forced into the rental sector. Landlord insurance is essential to solve all unforeseeable circumstances and when the property market looks better for sellers, then reconsider your options.
Miles Shipside, the director for Rightmove, said, “The better properties in the better areas remain in short supply, giving sellers of sought-after stock, and their agents, the confidence to come to market at a higher price.”
He also said that the current property prices would be ideal for buyers but as wages haven’t risen with inflation most properties are unaffordable.