House prices at new high as market conditions improve

The UK housing market is showing cautious signs of recovery, with asking prices hitting an all-time high, according to Rightmove.

The average price of property coming to the market jumped by 1.8%, or £6,647, this month to reach a new record of £372,894 following a higher-than-expected level of market activity since the start of the year.

This month’s increase is the biggest of the year so far, and is significantly higher than the historic average May rise of 1%.

The data from the property portal also reveals that  agreed sales numbers are currently just 3% behind the last more normal pre-pandemic market of 2019.

The discount from final asking price to agreed sale price has steadied at an average of 3.1%, in line with normal market levels, reflecting home-mover confidence in the outlook for the market.

Whilst increased price confidence appears to be more justified in the lower and middle market sectors, there are some signs of over-optimism in the top-of-the-ladder sector, as some discretionary buyers hang back.

Buyer demand is 1% lower than in 2019 for top-of-the-ladder properties, compared with 3% above 2019’s level in the second-stepper sector, and 6% above in the first-time-buyer sector

The figures also show that average mortgage rates are remaining steady despite another increase in the Bank of England base rate, with an average five-year fixed, 15% deposit mortgage is now 4.56%, compared to 5.89% last October.

Rightmove’s Tim Bannister said: “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. 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.”

This article is taken from Property Industry Eye.