More than 41% of respondents feel that prices will be around the same level this time next year, though the patchy nature of the current property market, driven by local wealth demographics and supply/demand dynamics, is highlighted by a doubling of those expecting a 10% plus price increase.
While still a modest proportion overall, this figure has jumped from 3% to 7% in the last quarter and has never been higher. The number expecting falls in excess of 10% is the lowest Rightmove has ever recorded in eleven surveys to date, at just 3.2%.
Rightmove director Miles Shipside comments:
“The proportion of those people expecting prices to be the same one year from now has grown for seven consecutive quarters to reach the highest level we have ever recorded. The most common view, therefore, is that we have seen the end of price falls, though there are many different local permutations.”
"Overall, the proportion expecting prices to be higher in 12 months’ time stands at 26.2%, while 26.9% forecast lower prices, again reflecting the mixed picture depending on location. Rightmove’s detailed analysis of price confidence at a local level reveals some more extreme views, which serves to highlight the patchy and very local nature of the market in this downturn.
"For example, 11.8% of respondents in Central London forecast that prices will have increased by 10% or more in a year’s time. By contrast there is an expectation of falls of 10% or more in the more northerly locations of Preston (10.1% of respondents), Aberdeen (13.1%) and Blackpool (12.6%).
Shipside adds:
“It is no surprise that cash-rich Central London is the most optimistic on price, while some of the more northerly cities face a more negative price outlook.
"Our findings reflect the patchy nature of the current market and how variables like employment opportunities, wealth demographics and consumer confidence are impacting local supply and demand. Figuring out your local formula can really help your chances of success in the today’s market.”
As part of Rightmove’s survey, respondents are asked to give their opinion on whether they believe, on average, property in their local area is over-priced, about right, or under-priced.
"Across the UK approaching half of respondents (45.4%) feel property in their local market is overpriced, with over half of that group (23%) of the view that prices are over-priced by more than 10%.
"With just over a quarter (26.9%) expecting prices to be lower in 12 months’ time, and only 3.2% expecting the fall to be in excess of 10%, consumers in many areas appear to be facing a house price paradox.
Shipside comments:
“With nearly half of people feeling that homes for sale around them are over-priced, you might expect a similar number of them to be forecasting price falls. Instead a price paradox prevails, and those wanting to enter the property market may have to accept that it is likely to be at a price they feel is excessive.
"Unless this scenario changes in favour of homes being perceived as better value, this may deter some from rushing back to buy when mortgages become more readily available”. Oxford was voted as the most over-priced city by local respondents (65.2%), and, unsurprisingly, Greater London (63.2%) as the most ‘over-priced’ region.
"This is not necessarily a signal that prices in these areas are set to fall, but more likely a result of an excess of demand over supply.
"By contrast, residents of Glasgow considered their local areas most under-priced, with 31% of
that view, though still outnumbered by 34.6% of who felt their area was over-priced.
Shipside comments:
“Contrasting local opinions of the fair value of property illustrate how patchy activity can be within a mile or two in the same city.
"Whether you are on the wrong or right side of the tracks depends on whether your area attracts buyers who can raise the necessary deposit to get a mortgage.
"In a deposit-poor area, your property will have to be well-presented and look like it is under-priced, and if you’ve achieved both of those, ensure your agent makes it really stand out to increase the odds of finding those scarcer buyers.”
