No Spring left in the housing market
Usually in Spring, especially May, the price of properties rise and have done for the past ten years. Yet this year, property prices are matching those recorded in April. In May 2011, there was a price increase of 1.3% and a rise of 3.2% has been recorded in the previous 10 years, even during the recession.
The absence of a price rise has been blamed on the lack of new properties coming onto the market in May, down 10% from April. Some say the market is ‘taking a break’ as it looses momentum earlier than usual in the year.
The property portal Rightmove has said that there has been a mismatch between buyers and sellers, with more sellers planning to trade down which outweighs the number aiming to trade up. This is largely down to the poor economy, where a more affordable property is required due to a rise in the cost of living and paying a higher mortgage is simply not an option.
London on the other hand, has experienced a traditional price rise of 0.9% this May, which makes the average property price just under half a million pounds. The bad news is there have only been 4,300 new properties on the market each week in London this May, compared to a usual figure of 6,000 which was reached in May 2007.
The number of properties that have come onto the market per week in May excluding London is 10% less than April at just over 26,000, with every region reporting a property drought.
Some agents have blamed the lack of new properties on the market on end of the Stamp Duty holiday in March, which was introduced to encourage first time buyers to take the first steps onto the property ladder. Other agents have blamed the poor weather in May for the lack of enthusiasm, with more rain than usual.
However, even if the weather does brighten up, the property market is not expected to improve because of the many celebrations ahead including the Queen’s Diamond Jubilee and the London Olympics.
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