London Asking Prices at Record on Scrapped Rules
London home sellers raised asking prices to a record as they sought to tap the housing-market recovery and benefit from the scrapping of costly disclosure rules, Rightmove Plc said.
Average asking prices in the capital rose 2.2 percent in June from the previous month to 429,597 pounds ($640,000), the operator of Britain’s biggest property website said in an e- mailed statement in London today. Prices increased for a sixth month in the country as a whole, climbing 0.3 percent.
Demand for properties has withstood uncertainty on the U.K. economy and the increase in supply caused by the end to so- called Home Information Pack requirements for marketing properties. The housing-market recovery may still falter because mortgage approvals remain at only half the level of the 2007 boom and as budget cuts and tax increases loom, Rightmove said.
“There is a bit of a post-HIP party atmosphere, with estate agents glad to restock their shelves and new sellers willing to give moving a go with fewer cost commitments,” Miles Shipside, Rightmove’s commercial director, said in the statement. “This pent-up enthusiasm to sell will tail off to a degree, though if it continues those who are serious about selling will have to consider reducing their prices.”
The pound rose 0.4 percent today to $1.4882 at 8:38 a.m. in London. The yield on the 10-year U.K. government bond was unchanged at 3.54 percent.
James Gubbins, a real-estate agent in the Pimlico area of London, close to the Tate Britain museum, said the abolition of Home Information Packs has helped him shift properties that otherwise would have languished unsold. He was able to turn an instruction to market a flat on Morton Place, listed for 850,000 pounds, into a sale of the entire building.
“We wouldn’t have been able to move as quickly had there been a HIPs requirement, the buyer would have gone off and bought something else,” he said in a telephone interview. “We’ve still got an imbalance between supply and demand, and that’s sustaining prices.”
The supply of new properties for sale in London rose 34 percent from May, and is up 88 percent from a year earlier. The time a property spends on the market dropped to 58 days from 83 days during the previous month, Rightmove said.
The “barrier to selling” created by HIPs “has been a major factor in underpinning prices, and indeed creating a new all-time high average asking price when combined with the robustness of London buyer demand,” Rightmove said.
London led gains across Britain, where price growth slowed to less than half of the 0.7 percent pace recorded in May. National average asking prices rose 5 percent from a year earlier and are less than 5,000 pounds short of the peak reached in May 2008.
House prices may fall in the second half of the year, and may show no change for 2010, Shipside said. A scarcity of mortgages, and the possibility that the government will raise capital-gains tax, will ease demand for new property, he said.
Prime Minister David Cameron has pledged “fair and reasonable” changes to the capital-gains tax, now at 18 percent, compared with a top rate of income tax above 40 percent. Chancellor of the Exchequer George Osborne may announce a higher levy in tomorrow’s emergency budget.
Britons’ anxiety about their household finances worsened in June amid concern about looming austerity in public finances, according to a survey of more than 2,000 households by Markit Economics. Forty-four percent of Britons said their financial position will worsen in the next 12 months, while only 22 percent predicted an improvement.
The Council of Mortgage Lenders said last week that credit availability “remains problematic for first-time buyers who tend not to have a substantial deposit.” The Bank of England said on June 18 that the six biggest mortgage banks approved 51,000 mortgages in May, still down by 10,000 from November.
“These factors are likely to put an end to this year’s recovery in house prices,” Shipside said. “We are now seeing more competition among sellers and a slowdown in the number of buyers as the market begins to turn.”
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