Lack of supply pushes asking prices up

Asking prices for properties for sale have risen by 2.4% in May – the largest rise in this month since 2003, according to the latest report from property website Rightmove. However, this sits alongside the fact that May also saw extremely low levels of property coming to market with just 61,000 sellers this month compared with 135,000 last year.

However, not all prices are rising, the report says. 59,072 properties on the website have reduced asking prices by 2% or more in the last four weeks, with an average reduction of 6.8%.

Prospective buyers with no property to sell are becoming increasingly active in the market, but the problem remains the supply of houses for sale. ‘Many would-be sellers are now victims of equity immobility, and the choice of when and how to move is now out of their hands’, said Miles Shipside from Rightmove.

‘While some of the impetus behind the increase in asking prices will be due to ambition or optimism, it will also be out of necessity as new sellers attempt to scrape together enough equity to move.’ The report points out that those who remortgaged in the past decade, recent buyers and those who have lost their equity cushion are all at the mercy of low prices and a scarcity of good mortgage deals for any less than 25% of a deposit on a new property.

At present it looks like the market is bumping along the bottom, the report concludes, with limited supply preventing further price falls which is a welcome element of stability.

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