Improving house market pushes prices up to a record high

Improving house market pushes prices up to a record high

0:01 AM, 22nd May 2023, About A year ago

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The UK’s property prices are rocketing again with the latest figures revealing a surge in the average price of homes being put up for sale, research reveals.

Rightmove says there has been a whopping 1.8% increase – or £6,647 – in price to push them up to a new record of £372,894.

The property platform says the rise is an overdue response to the unexpected surge in market activity since the start of the year.

This is also the biggest rise of the year so far and much higher than May’s increase of 1.0%.

Also, the number of agreed sales is only 3% behind the pre-pandemic market levels of 2019.

‘Strong jump in new seller asking prices’

Tim Bannister, Rightmove’s director of property science, 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.”

He added: “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.”

Discount from the final asking price to the agreed sale price

The firm’s latest market report shows that the discount from the final asking price to the agreed sale price has settled at an average of 3.1% – that’s in line with the market’s normal levels.

Rightmove says this shows that people are feeling good about the future of the property market.

However, some buyers of top-end homes are not as confident as others and discretionary buyers are holding back – leading to over-optimism in this sector.

Meanwhile, first time buyers and second-steppers are seeing buyer demand rising by 6% more than in 2019 for first-timers, and 3% above 2019’s level for second-steppers.

And, despite an increase in the Bank of England base rate, average mortgage rates are remaining steady.

The platform says that a buyer with a 15% deposit could secure an average five-year fixed mortgage rate of 4.56%, compared to 5.89% last October.

‘Record price is a strong indication of sellers’ confidence’

Mr Bannister said: “This month’s record price is a strong indication of sellers’ confidence, and we can see from activity levels and the still relatively limited choice of property for sale that this confidence is justified in some segments of the market.

“More discretionary sellers at the top-end may be prepared to price high and wait for the right buyer, and whilst it is positive that they appear to feel no financial pressure to sell, the data suggests that some sellers in this sector will need to price more competitively if they want to find a buyer in the current market.

“A more stable mortgage market is good news, and after a period of rapid rate rises followed by some significant falls this year, this period of relative stability will help home-movers to plan ahead.”

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