Home asking prices reach record high but market still struggling

The price of a home coming to market rose by one per cent month-on-month in June to reach £246,235 on average, but London is the only region where prices have outpaced inflation over the last five years, the Rightmove house price index found.

Nearly 30,000 new sellers a week came to market in the three weeks before the Diamond Jubilee weekend, the highest rate of new listings for nearly two years, suggesting asking price increases will slow down as seller competition intensifies, the study said.

Elections in Greece and the eurozone turmoil, as well as this summer’s sporting events such as Euro 2012 and Olympics are likely to dampen house sales further, with buyers more interested in viewing sport than property, the study said.

Asking prices have risen to new record highs for the last three months in a row. But while sellers’ prices are up by two per cent on August 2007, just before the economy faced the run on Northern Rock, they have fallen by 13 per cent in real terms after retail prices index (RPI) inflation is taken into account.

London is the only region in the study covering England and Wales to record an inflation-busting increase in asking prices, which stand at a new high for the capital of £477,440. Prices there have increased by three per cent after inflation since August 2007.

Prices in the South East also hit a new high of £318,717, although prices in the region are 11 per cent below those in August 2007 in real terms.

Asking prices have plummeted furthest in real terms in Wales, where they stand at £167,875, a sharp 24 per cent fall since August 2007.

Rightmove director Miles Shipside said: “The better properties in the better areas remain in short supply, giving sellers of sought-after stock, and their agents, the confidence to come to market at a higher price.

“The right property within commuting or holiday bolt-hole distance of the capital seems to be an attractive each-way bet with the potential to be both recession-proof and offer good odds to keep pace with, or even outstrip, inflation.”

Mr Shipside said that from a seller perspective, most are still worse off in real terms than they would have been selling five years ago.