Average price of property coming to the market is up 1.8% (+£6,647)
House prices have hit a record high as new sellers respond to the improving market, reports Rightmove.
The average price of property coming to the market is up by 1.8% (+£6,647) this month to a new record of £372,894 in a delayed response to the higher-than-expected level of housing market activity since the start of the year, reports Rightmove in its latest House Price Index report (May 2023).
1.8% monthly increase
This 1.8% monthly increase is the largest of the year so far, and is significantly bigger than the historic average May rise of 1.0%.
Agreed sales numbers are currently only 3% behind the last more normal pre-pandemic market of 2019.
It also reports that the discount from final asking price to sale agreed price has steadied at an average of 3.1%, which is in line with normal market levels, reflecting home-mover confidence in the market outlook.
It also says that whilst greater price confidence appears to be more justified in the lower and middle market sectors, there are signs of over-optimism in the top-of-the-ladder sector, as some discretionary buyers hold back.
Buyer demand is 1% down on 2019 for top-of-the-ladder properties, compared with 3% above 2019’s level in the second-stepper sector, and 6% higher in the first-time-buyer sector.
Rightmove reports average mortgage rates are remaining steady despite another hike in the Bank of England base rate; an average 5-year fixed, 15% deposit mortgage is now 4.56%, compared to 5.89% last October, it says.
Positive activity
Rightmove says that earlier in the spring we were seeing some caution on asking prices from new sellers despite good signs for activity levels, as home-movers continued to navigate the mini-budget fallout. Now, with buyer demand 3% up on 2019 and sales agreed just 3% behind 2019’s levels, this positive activity has filtered through to new sellers’ asking prices. However, it says, the “current multi-speed, hyper-local market” is still price-sensitive, and buyer affordability remains stretched.
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. 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.”
Sellers’ confidence
He added: “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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