House price growth slows down – and renters look to buy

House price growth slows down – and renters look to buy

12:10 PM, 24th April 2023, About A year ago

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Economic headwinds are seeing home sellers cautiously pricing their properties to sell with April’s prices increasing less than expected, Rightmove says.

And record high rents mean that tenants who can afford a deposit and a mortgage are increasingly looking at buying.

The platform reveals that asking prices rose by just 0.2% (+£890) to an average of £366,247 – that rise is lower than the 1.2% experts expect at this time of year.

Rightmove says that sellers are listening to agents and pricing their homes to tempt buyers as the market transitions to a slower pace.

However, the firm also warns that first-time buyers are facing record prices as sales recover and the average now is £224,963.

‘Conditions may tempt more sellers to enter the market’

Rightmove’s director of property science, Tim Bannister, said: “The current unexpectedly stable conditions may tempt more sellers to enter the market who had been considering a move in the last few years but had been put off by its frenetic pace.

“Buyers may have struggled to find a home that suited their needs in the stock-constrained market of recent years and will now find more choice available.”

He added: “However, those who have now decided to make a move should not wait around too long to make an enquiry if they see the right home for sale, as not only is the number of sales agreed now back to pre-pandemic levels, but homes are also on average selling 12 days more quickly than at this time in 2019.”

Buying a home is a compelling undertaking

The firm says that with renters facing record rent levels, buying a home for those who can afford to is a compelling undertaking.

Rightmove’s data shows that the number of sales agreed are now at normal pre-pandemic market conditions which were last seen in March 2019.

For the first time buyer sector – that is two bedrooms and fewer – is leading this recovery, with agreed sales now 4% higher than in March 2019.

Second-stepper sales are 4% behind, and the top-of-the-ladder sector sales are 3% behind.

‘Asking prices are holding up’

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “Sales agreed may be down but asking prices are holding up.

“However, what we are seeing in our offices is that when it comes to the crunch those buyers who are either equity-rich or who have a ready-to-go mortgage are negotiating hard in order to get what they want.

“First-time buyers in particular are seizing the opportunity in increasing numbers to flex their muscles and get the best deals they can, in order to escape inexorably rising rents.”

‘High rents are persuading first-time buyers to take the plunge’

Tomer Aboody, a director of property lender MT Finance, said: “High rents are persuading first-time buyers to take the plunge and commit to a property purchase.

“They are taking advantage of lower mortgage rates in recent weeks, as well as lenders prepared to lend at higher loan-to-values.

“The outcome is mortgage payments which are cheaper than renting, resulting in a sensible move in the longer term.”

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