The latest May house price index for the UK has been released and it’s showing a significant increase in property prices according to Rightmove.
- The average price of property coming to the market jumps by 1.8% (+£6,647) this month to reach a new record of £372,894 in a delayed response to the higher-than-expected level of market activity since the start of the year:
- This 1.8% monthly increase is the biggest of the year so far, and is significantly higher than the historic average May rise of 1.0%
- Agreed sales numbers are currently just 3% behind the last more normal pre-pandemic market of 2019
- The discount from final asking price to agreed sale price has steadied at an average of 3.1%, in line with normal market levels, reflecting home-mover confidence in the outlook for the market
- Whilst increased price confidence appears to be more justified in the lower and middle market sectors, there are some signs of over-optimism in the top-of-the-ladder sector, as some discretionary buyers hang back
However, the rise in prices may also be due to a lack of supply, as the number of homes for sale in the UK has decreased by 17% since the same period last year. This may make it more difficult for investors to find suitable properties to purchase, particularly if they are looking for a specific type of property or in a particular location.
The impact of the pandemic has also led to more people seeking larger homes with gardens and home offices, as remote working becomes more prevalent. As a result, detached properties have risen in value by 8.6% compared to last year, while flats have only increased by 1.4%
The latest HPI also identified significant variations in house prices in different regions of the country. In London, for example, average house prices have risen by 2.8% in the past year, with the average price now standing at £496,269. In contrast, the North East has seen a more modest increase of just 1.6%, with the average house price now at £138,456.
Ultimately, success in the property market will depend on a range of factors, including market conditions, investor strategy, and a willingness to adapt and evolve in response to changing circumstances but overall it’s more good news for the property investor sector.
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