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Third consecutive monthly record for UK property asking prices

Monthly house price index reaches 200.3 points in June, boosted by demand in London.

The average asking price for homes in the UK reached £246,235 in June – an increase of 1 per cent compared to £243,759 last month – according to the house price index (HPI) figures released by Rightmove, the UK’s largest property website. The rise in prices was driven largely by a more robust market in the southern part of the country.

Miles Shipside, director at Rightmove, said:

While the national average price of property coming to market has set new records in each of the last three months, sellers should not break out the bunting in celebration until they have done their homework. It remains a very local market ruled by property style and location, and a few minutes study will reveal whether your property is hot or not.

Agents report a two-tier market where those who can afford to price realistically are selling, while those who are equity-poor are struggling to sell as they often have to price up to make any prospect of a move viable. The traditionally more active spring window is closing and a summer of sporting distractions underway. Cutting your asking price to be cheaper than your competition and promoting your selling points better will be the key to avoid being an also-ran in the race to sell.

Record new-seller prices have also been set in two out of the four regions in the southern half of the UK, continuing the seemingly counterintuitive credit-crunch trend of suitable property supply failing to satisfy demand.

With the average asking price at £477,440, house prices in London rose by £8,126, or by 1.7 per cent on the previous high set last month. Prices in the south-east, meanwhile, grew by 0.5 per cent to £1,662 above its previous record set in October 2011.

Shipside added:

These strong rises in the south of the country have helped to push the national average asking price into new record territory. In these uncertain economic times, lenders feel safer to lend to those with a cash-cushion and those sitting on that cash often feel more comfortable with it invested in tangible assets, including bricks and mortar. 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.

Taking inflation (as measured by RPI) into account over the five-year period, property coming to market in June is more than 13 per cent cheaper in real terms. According to Rightmove, Greater London is the only region where the average asking price has outpaced inflation and is 3 per cent ahead over the period. The other nine regions of England and Wales have seen double-digit percentage falls in new-seller asking prices when adjusted for inflation, with Wales performing worst: real prices there are now 24 per cent lower than in August 2007.

Shipside continued:

Property has a track record of being a hedge against inflation and continues to be seen as such. However, while it has fared better than many investments in the last five years, it has failed to hold its own in real terms in most parts of the country. This reduction in real house prices would be great news for home-movers if their wages had kept pace with inflation and the return of mass-market mortgage finance was just around the corner.

However, the reality is wage freezes, rising costs of living and continuing tight mortgage funding have squeezed affordability for many buyers. From a seller perspective, in spite of new record prices, most are still worse off in real terms than they would have been selling five years ago. The more property-affluent Londoners are the exception, and in the capital the more common rule of thumb is that the rich have got richer.