Austerity hits house prices

SEVERE austerity measures and an uncertain economic climate will kill off the recovery in house prices, property website Rightmove will warn today.

Revealing in its monthly survey that home asking prices only rose 0.3 per cent in June on the previous month, Rightmove said that the pace is slackening and the market is beginning to turn.

Miles Shipside, commercial director at Rightmove, said: “They say that troubles come in threes. The continuing mortgage famine has now been joined by a surge in sellers following the abolition of Hips and investor reticence driven by rumours of CGT increases. Together, these factors are likely to put an end to this year’s recovery in house prices.”

He added: “A surge of Hip-free properties has come to the market, and mortgage-reliant buyers and wary investors are failing to match the increased supply. That spells tougher times for sellers and tenants, with more properties for sale and fewer finding their way into landlords’ hands.”

According to Rightmove, the abolition of Home Information Packs (Hips) caused a 22 per cent increase in the number of sellers coming to the market. This has resulted in a large jump in unsold stock – the average unsold stock per estate agency branch increased from 71 to 74, the fourth monthly rise in succession.

Property has typically been viewed as a good hedge against high inflation but this appears to be no longer the case. The annual increase in average asking prices is just five per cent higher, less than annual RPI inflation, which is currently running at 5.1 per cent.

Half of the 10 regions in England and Wales covered by the survey reported negative monthly changes. Only London managed to post a strong rise in asking prices compared with last month – the 2.2 per cent monthly increase takes the annual change to 8.2 per cent.