Property sellers are being warned of the risks of listing their home at an unrealistic price as buyers are shunning ambitious listings.
Newly-listed asking prices increased two per cent monthly in the month to mid-February, a jump of £5,986 compared to January, data from Rightmove reveals.
But it warned that the property market is cooling and homes priced too ambitiously by sellers risk of standing out as poor value and remaining sat on the shelf as buyers are put off.
Price tag: Annually, a typical property asking price has risen 2.3% – the lowest increase since April 2013
It means the typical price tag in England & Wales is £306,231 – far higher than the £220,000 average home value stated in the Office for National Statistics index last week, albeit that is for a UK home.
The monthly jump while sizeable was, in fact, the smallest uplift at this time of year since February 2009, data from the property website shows.
In a market where prices are rising quickly, a property being over-priced is less noticeable as the price tags on other homes will catch up with it before too long, Rightmove says.
But in a cooling market, over-priced homes stick out more.
Three-quarters of estate agents surveyed by Rightmove reported their local market as being ‘price sensitive’, with buyers reluctant to make enquiries if a property is priced too highly by more than a few per cent.
Miles Shipside, director of Rightmove, said that at a time when the pace of inflation is picking up and the price of goods generally is rising at a faster rate, the increase in property prices is slowing.
He added: ‘Perhaps we’re approaching the territory where many buyers are unable or unwilling to pay what sellers are asking, given the negative combination of rises in the cost of living, tighter lending criteria, and a dose of Brexit uncertainty.’
Regional view: Wales saw typical asking prices soar 8.1% monthly – while in the South East they were flat
Rightmove said demand for homes remains strong.
The website recorded over 131million visits in January, three million higher than a year earlier and a record high for this time of year.
However, the average time to sell a property has crept back up to 79 days – the same level as this time last year.
It fell to a low of 57 days in May, showing that the lead-up to summer may be the best time to a list a home.
Selling time: It appears May and June are the quickest times to shift a property
On an annual basis, asking prices are 2.3 per cent higher than a year ago – the lowest annual rate of increase since April 2013 – a time when the typical price tag on a home was nearly £60,000 lower.
It comes after a few months saw heavy falls, including December where asking prices dropped 2.1 per cent.
Rise and fall: The 2% jump in asking prices in February comes after the second half of the year saw some big falls, including 2.1% in December
Jeremy Duncombe, director at Legal & General Mortgage Club, said: ‘The housing market has always experienced monthly fluctuations in the price of property, so today’s results are no real shock, particularly as the annual figures continue to show house prices rising over the course of the year.
‘After the fanfare surrounding the Housing White Paper, it is reassuring to see the Government finally recognise and make plans to tackle the supply and demand crisis that is the root cause of the housing crisis.
‘With a programme in place to address housing supply, it’s now time to get on with the job of building thousands of new homes, for all tenures, to create a fairer housing market for the future.’
Annual rises: The annual rise in property asking prices is now at its lowest level since February 2013
Some house sellers may plan to start with an ambitious price tag, thinking they can slash it later if they get little interest.
Mr Shipside adds: ‘With the annual rate of price increase now at 2.3 per cent a property that is over-priced by more than five per cent will have to wait more than two years for the market to catch up with it.
‘Over-pricing loses you that vital initial interest and impetus, and buyers often have reservations about a property that has not sold as quickly as others or has had a price reduction.’
No region saw a monthly fall in asking prices in February.
Wales saw the biggest jump, with an 8.1 per cent increase taking the average asking price to £177,556 – up £13,265 on January.
The South East of England saw the weakest monthly increase, with no change leaving the average asking price at £404,951.
Regions where asking prices are already relatively high saw smaller monthly increases in asking prices than some less expensive areas.
London and East Anglia recorded increases of 2.6 and 1.5 per cent respectively and the North East of and Yorkshire and Humberside saw increases of 4.1 and 3.5 per cent respectively.