House prices hit record high but growth slows

House prices hit record high but growth slows

9:45 AM, 20th May 2024, About a month ago

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House prices in the UK have reached a new record high, according to Rightmove, but the rate of growth is slowing.

It says the average asking price for properties coming to market rose by 0.8% this month to £375,131, but this is only 0.6% higher than a year ago.

The strong performance in May, a traditionally busy month for the property market, is being driven by the top-of-the-ladder sector, which includes detached four-bedroom and five-bedroom plus properties.

This sector has seen prices rise by an average of 1.3% compared with last year.

‘Improved market activity levels and conditions’

The firm’s director of property science, Tim Bannister, said: “We expect that the improved market activity levels and conditions this year will result in higher transaction numbers at the end of 2024 than last year.

“However, the extremely lengthy legal completion process is a frustrating barrier to home-movers converting agreed sales into completed transactions more quickly.

“It may seem surreal to be thinking about Christmas in May, but we know that many would-be sellers picture celebrating the festivities in a new home, and to achieve that, now is the time to be coming to market.”

He says that sellers need to ‘price attractively’ if they want to quickly sell.

Rightmove also says that there are regional variations with the North East of England having the cheapest average prices is experiencing the strongest growth.

However, despite the record asking prices, the market remains price sensitive.

Affordability is a concern for many buyers, with mortgage rates remaining high.

Evidence of pent-up demand in the market

And, despite high mortgage rates, there is evidence of pent-up demand in the market as the number of sales agreed between buyers and sellers rose by 17% in the first quarter compared with last year.

This is outstripping the 12% increase in the number of new sellers coming to market.

Rightmove expects the number of completed sales transactions this year to reach around 1.1 million.

However, the lengthy completion process remains a major challenge as the average time between agreeing a sale and legal completion is currently five months.

‘Latest figures may prove an ideal inspiration’

Nathan Emerson, Propertymark’s chief executive, said: “Spring heading into summer is traditionally a busy time for the housing market and these latest figures may prove an ideal inspiration for sellers to use this as an opportunity to place their property on the market.

“Propertymark’s own Housing Insight Report demonstrates that there has been a recent 4% increase in the number of potential buyers registered at each member branch, representing a strong appetite for buying and selling homes currently.”

Daniel Austin, the chief executive at ASK Partners, said: “The property sector is recovering. Rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential.

“Well-maintained properties boasting modern amenities tend to command higher prices, while neglected ones may struggle to attract tenants or investors.

“In the current market, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost.”

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