The latest figures from the property website Rightmove suggest that sellers are feeling a bit more confident and are pushing up their asking prices.
Rightmove puts the 1.8% rise in asking prices in April on top of the 0.9% rise in March down to the normal spring bounce. But the chances are that the more bullish noise from economists and politicians about the state of the economy will be helping to reinforce confidence.
It remains to be seen how sustainable this rise in asking prices is. From what I can judge the balance of risks suggests that it may be transient, with a flurry of activity created by the impact of the emergency interest rate set by the Bank of England.
This drop in interest rates appears to have done a number of things.
- It has reduced mortgage costs, so reduced the number of people in distress and so reduced the number of distress sales, so reduced downward pressure of house prices.
- It has reduced savings rates and so inevitably will have increased the numbers looking again at investing in property (among other assets).
- It has reduced the immediate cost of trading up the "property ladder", which mathematically looks more attractive now than it has for some while.
- It will have encouraged some of those sitting on the fence to take the plunge into buying a home now as opposed to waiting.
- In slowing the rate of decline of house prices it has made buying a house look less risky.
But these emergency rates are short term, interest rates will rise. And, oddly enough, the more good news there is the quicker the day will come when they do rise.
How far they rise and how this translates to mortgage payments is uncertain. But a quick comparison between 2 year fixed rate and 10 year fixed rate mortgages, gives a suggestion of how lenders see rates going.
One of the major problems with "affordability" as a gauge within the housing market is that it is short term, when the mortgage period is long term.
If some of the "lift" the housing market has received of late is down to people taking on mortgages on the basis of their short-term affordability, we may simply be delaying pain in the market if there turns out to be an upward twist in rates.
Also the impact of unemployment on the housing market is yet to be felt. It will take some while for the effects of unemployment to filter through as the newly unemployed take time to reassess their spending and prospects.
I suggest not too much should be read into the current rise in asking prices, other than the fact that there is a bit more confidence about, which is nice.
Perhaps more interesting is the press release from Rightmove that popped into my inbox just after I started tapping this piece.
This release sought to highlight a sentence low down in the overview of the house price index commentary that said: "At the moment, Rightmove is seeing around 16,000 asking price reductions of 2% or more each week across the UK."
That is more than 60,000 price reduction a month of 2% or more. The website claims it takes on 200,000 new properties each month.
So one thing is clear, asking prices are definitely not sticking.