Property asking prices climb after market freeze despite bleak economic outlook

The asking prices of properties put up for sale after lockdown have risen, reflecting the optimism of sellers in the face of a newly-reopened market.

Rightmove, a property website, reported that the average asking price of homes in England was 1.9pc higher in May, after market restrictions were lifted, compared to March.

It also found that sales prices were holding up: since lockdown, buyers paid on average 97.7pc of the asking price, higher than the level measured in February, at 96.6pc, according to Land Registry data. 

Asking prices only reflect sellers’ sentiment, rather than whole market dynamics that show buyers’ concern over economic factors. Lenders Halifax and Nationwide, which both base their indices on mortgage offers, reported monthly house price falls in May, at 0.5pc and 1.7pc respectively. 

Rightmove’s figures suggest that vendors hope to take advantage of pent-up demand and mitigate any lower offers. Estate agents have said that buyers are asking for discounts of 5pc to 10pc, but many sellers are holding firm for now. 

Miles Shipside of Rightmove said: “There are no signs of panic selling or even a price dip. Some sellers who had agreed a sale before lockdown have been worrying that their buyer may try to renegotiate with a reduced offer. On this evidence buyers may now be trying to exchange quickly, as there are signs of high pent-up demand and upwards price pressure, rather than downwards.” 

Rightmove has reported a surge of activity on the site, with record days for website traffic as well as new listings. It also suggested that the closing of the property market affected 175,000 sellers who could not put their homes up for sale. 

The index, which was suspended during lockdown due to a lack of transactions, showed that the number of sales agreed is now just 3pc down on a year ago, having recovered from a 94pc fall in lockdown, with 40,000 sales agreed since the housing market was reopened on 13 May. The transactions taking place immediately after restrictions were lifted were likely to mostly be those that were in progress when lockdown happened.

Lucian Cook, of Savills, said: “The pace at which buyers have returned to the market has been surprising. It has been fuelled by a combination of pent up demand from those with secure household finances and new demand from those whose experience of lockdown has caused them to look for a home that primarily better meets their need for more space. 

“That together with a limited pool of available stock and a relative absence of forced sales has supported asking prices since the market reopened.” 

Many people who were previously potential buyers are now locked out of the market because they have been furloughed or lost their jobs. This situation is likely to intensify as the furlough scheme is wound up in the autumn, which many argue will lead to increasing levels of unemployment. Savills data show that most of the sales agreed so far since restrictions were lifted has been at the top end of the market.

Mr Cook added: “The backdrop of economic uncertainty and a limit on the number of people in a position to buy, means sellers will still have to take a fairly pragmatic view on pricing to achieve a sale over the coming months, particularly towards the back end of the year.”

First-time buyers are being squeezed too, as low-deposit mortgages are pulled because they are seen as being more risky. Mr Shipside suggested these figures may help boost options for these buyers.

“Lenders may also have been concerned about price instability affecting the risk profile of their low-deposit mortgages, so hopefully this will give them more confidence to increase their range of first-time-buyer products,” he said.

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