Property shortage boosts asking prices but experts say it won’t last

MILES SHIPSIDE:  INCREASE IS NOT SUSTAINABLE
MILES SHIPSIDE: INCREASE IS NOT SUSTAINABLE

Optimistic sellers boosted asking prices by more than £7,000 during the past month, but experts say this jump is unsustainable.

According to Rightmove’s latest index, asking prices went up 3.2% in the past month, the highest rise in the measure since April 2007.

The average asking price now stands at £229,398 compared with £222,261 in January.

Rightmove says asking prices have been driven by a lack of stock in popular areas.

This is particularly true in London, where asking prices have leapt by more than £20,000 to reach a record high of £427,987. Average national asking prices are now £13,300 higher than a year ago.

Miles Shipside, commercial di-rector at Rightmove, says: “Sellers are setting their sights higher and some estate agents are going along with this to win scarce instructions.”

But he says that sellers can only afford to put their properties on the market at a higher price while the number of vendors remains limited.
Shipside adds: “If sellers return to the market in big numbers the upward price pressure will not be sustainable.”

Stuart Law, chief executive of Assetz, says: “It is unlikely that the property price growth we have seen in recent months will continue throughout 2010 due to the government’s need to pay off the national debt. Higher taxes will hold back growth. “This indicates another year of modest house price growth in 2010, which is likely to be closer to 5% than the 10% that was seen in the pre-recession prop-erty boom .”

But Countrywide Estate Agents says it has seen a fresh wave of house buyers and sellers enter the market since the start of the year.
The estate agency network saw new buyer enquiries rise by almost 82% in January compared with December.