One of the key leading indicators of house price inflation points to growth period for the remainder of 2013
The gap between the asking price for a property and the price ultimately achieved is smaller than at any time since 2007, according to new research from Hamptons International. The size of this gap is closely correlated to the pace of house price inflation and is a good leading indicator of future house price performance. The recent narrowing of the gap suggests that house price growth will gather pace across England and Wales over the rest of country before the end of 2013.
Hamptons International has calculated that on average achieved prices were just 2.9 per cent lower than asking prices across England and Wales in the 3 months to October this year, down from 3.4 per cent last year and now the smallest it has been in six years.
The narrowing gap between asking and achieved prices is evident in almost every part of England and Wales. The only areas in which it hasn’t narrowed are in the North East and Wales. Unsurprisingly, the gap has narrowed most in London where achieved prices are now on average 98 per cent of the asking price.
Fionnuala Earley, Research Director at Hamptons International, comments: “Increased confidence in the housing market as the economy begins to recover, coupled with stimulus from the Government’s Help to Buy scheme, is encouraging previously nervous or frustrated would-be buyers into the market at last.
“This new demand, in combination with relatively low supplies of property for sale means that there is less room for negotiation on asking prices. The gap between asking and achieved prices has now fallen to its lowest in six years and shows that the balance is clearly moving in favour of sellers.
“Paradoxically this is good news for both buyers and sellers. Further price rises, as predicted by this measure, should encourage more people to put their property up for sale and an improvement in supply will foster a more liquid and therefore a more stable market.”
Marc Goldberg, Head of Sales at Hamptons International,added: “Confidence in the property market is at its highest in years and we are seeing more and more buyers coming to the market which has resulted in price increases across the country. What we now need to see is more sellers coming to the market to improve the supply and balance the increasing demand. More transactions will be the key to a healthier market as confidence continues to grow.”
*In September, Hamptons International’s data showed that supply was down by 11 per cent compared with the previous year, new applicants were up 25 per cent and sales were up almost 40 per cent.
*Mortgage lenders Nationwide and Halifax
For media enquiries please contact:
Aisling Gray, Senior PR Manager, Hamptons International
020 7758 8422 / 07786 118634 / firstname.lastname@example.org
Hamptons International’s analysis suggests that the difference between asking price and achieved price can be used as an indicator of the short-term future property market price performance as it is leads well known indices* by up to a month.