Resurgence in UK housing market as asking prices soar
The latest findings from Rightmove's House Price Index reveal a noteworthy development in the UK property market. The average price of property coming to the market has experienced a substantial increase of 1.8% this month, equivalent to £6,647, reaching an all-time high of £372,894. This surge in prices surpasses the historical average rise of 1.0% typically observed in May. The robust growth seen in the property market this month can be attributed to the delayed response to the higher-than-anticipated level of market activity witnessed since the beginning of the year.
Despite initial concerns about the impact of the pandemic, agreed sales numbers are now only 3% lower compared to the more normal pre-pandemic market in 2019. This indicates a significant recovery in the market. Moreover, the discount from the final asking price to the agreed sale price has stabilised at an average of 3.1%, aligning with the typical levels observed in a regular market. This reflects the confidence of home-movers in the future prospects of the property market.
“This month’s strong jump in new seller asking prices looks like a belated reaction and a sign of increasing confidence from sellers, as we’d usually see such a big monthly increase earlier in the spring season. One reason for this increased confidence may be that the gloomy start-of-the-year predictions for the market are looking increasingly unlikely. What is much more likely is that the market will continue to transition to a more normal activity level this year following the exceptional activity of the pandemic years”, noted Tim Bannister Rightmove’s Director of Property Science. “Steadying mortgage rates and a generally more positive outlook for the economy are also contributing to more seller confidence, though there are likely to be more twists and turns to come. The market is still very price-sensitive and it is important that new sellers do not damage their prospects of a sale by overpricing initially and reducing later, with agents reporting that it’s the realistically-priced new instructions that are selling best.”
Prices hit record high as new sellers respond to improving market conditions with average price of property jumping by 1.8% (+£6,647) reaching a new record of £372,894 in a higher-than-expected level of market activity since the start of the year.
While increased pricing confidence is more justified in the lower and middle market segments, there are indications of over-optimism in the top-tier sector. Buyer demand for high-end properties is currently 1% lower than in 2019, in contrast to the second-stepper sector, which is 3% above 2019 levels, and the first-time-buyer sector, which is 6% higher. It is essential to note that the market remains price-sensitive, and affordability for buyers remains stretched.
Despite an increase in the Bank of England base rate, average mortgage rates have remained steady. For instance, an average 5-year fixed mortgage with a 15% deposit currently stands at 4.56%, compared to 5.89% in October last year. This stability in mortgage rates, coupled with a more positive economic outlook, has contributed to increased seller confidence.
Overall, the significant increase in new seller asking prices is a belated reaction reflecting growing confidence among sellers. The initial caution observed earlier in the spring season has now given way to increased optimism, as evidenced by the rise in buyer demand and the number of sales agreed. However, it is crucial for sellers to be mindful of the price sensitivity of the market and avoid overpricing initially, as realistic pricing leads to better sales outcomes.
In conclusion, the current market conditions indicate a shift towards a more normal level of activity following the exceptional years affected by the pandemic. While challenges and fluctuations are expected, the increased confidence among sellers, steady mortgage rates, and a positive economic outlook contribute to a more optimistic market sentiment. It is important for sellers to price their properties appropriately to ensure successful sales in this dynamic market environment.
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