Asking prices rise steeply

Residential property vendors are feeling so confident about the housing market that they lifted the average asking price of a home for sale by 1.2% in the first week of the year.

According to property website Rightmove the average asking price of a property in England and Wales now stands at £222,261. The news comes shortly after revelations that the cost of servicing a typical mortgage is now at its lowest level for five years, indicating that a recovery in the property market could be on the cards.

The Council of Mortgage Lenders revealed last week that interest rate cuts coupled with reduced prices and lenders' demands for larger deposits, meant those who bought property in November are spending 10.6% of their gross income on monthly interest repayments.

Rightmove described the housing market as having made a "buoyant start" to 2010, as record numbers of users logged on to its site to view property. User volumes increased 26% compared with the same period of 2009.

Rightmove calculates that the stock of properties available for sale has hit a 10-year low, another factor which could result in higher property prices, as demand comfortably outstrips supply. It said that the average estate agent currently has just 63 properties up for sale on its books - the lowest level since January 2008.

According to the website the average property now costs 4.1% more than it did in January 2009, a figure broadly in line with both the Halifax and Nationwide indices. The typical property has escalated in value by £8,000 over the year.

Commercial director Miles Shipside said: "This rise in asking prices is an early indicator that new sellers in 2010 have the confidence to try for a higher price, as the index was lined up for a fall until the turn of the year.

"We were expecting a drop of about 1%, but the optimism of those early January sellers flipped it around.

"This coincides with potential home-mover activity hitting new record highs, with our website recording its busiest week - and this rise in asking prices is an early indicator that new sellers in 2010 have the confidence to try for a higher price.

"With home-movers setting new search records and a lack of property for sale, the decision of post-New Year sellers to ask for a higher price could be a shrewd move."