Property market shows it’s on a ‘much more stable footing’ than many had thought
Average house prices have increased by nearly £3,000 in March as the property market shows it’s on a ‘much more stable footing’ than many had thought.
The average price of property coming to the market has increased by 0.8% (+£2,906) this month to £365,357, reports Rightmove in its newly-published House Price Index report.
Higher degree of pricing caution
This is below the average monthly increase of 1% seen in March over the last 20 years, reflecting a higher degree of pricing caution by many new sellers than is usually witnessed at this time of year, says Rightmove.
The exception to this caution is a 1.2% monthly price rise in the larger home top-of-the-ladder sector, in contrast to more modest 0.4% and 0.5% respective rises in the first-time buyer and second-stepper sectors.
Overall, new seller asking prices are now £5,800 below October 2022’s peak, with annual price growth continuing to ease and now at +3.0%.
Activity levels of the more normal market of 2019
The data, reports Rightmove, continues to point to a market on a much more stable footing than many anticipated and cautiously transitioning towards the activity levels of the more normal market of 2019.
“Stability and confidence continuing to return”
Tim Bannister, Rightmove’s Director of Property Science, said: “The beginning of the spring season sees stability and confidence continuing to return to the market as it recovers from the turbulence at the end of 2022. The pace of the market reached an unsustainable level in the last two years, and was on track to slow to a more normal level, though the speed of this slowdown to more normality was accelerated by the reaction to September’s mini-Budget. While higher mortgage rates and economic headwinds raise challenges, many potential home movers who were effectively side-lined in the frenetic bidding wars of the last two years will find that a slower-paced market gives them time to plan and secure their next move as we enter the traditionally busy spring-buying season.“
Increased buyer activity
Rightmove reports that typical first-time buyer properties (two-bedrooms and fewer) are leading a cautious recovery, with sales agreed in this sector improving quickest. In the last couple of weeks, agreed sales are only 4% behind the same period in the more normal market of 2019. However, they are 18% behind last year’s exceptional level. The result of this increased buyer activity means that average asking prices for first-time buyer type properties are now only £500 below their peak last year. Rightmove says it’s likely that many in this group are getting some kind of support from family or have been able to avoid record rents and saved a larger deposit by staying with parents for longer.
By contrast and spotlighting the current hyper-local and differences in market sectors, sales agreed in the last two weeks in the top-of-the-ladder and second-stepper homes sectors are 10% and 13% behind the same period in 2019 respectively.
Rightmove reports that while the modest 0.4% rise in average second-stepper asking prices demonstrates this more muted level of activity, the 1.2% increase in the most expensive property sector seems to be over-optimistic given the slower recovery in sales agreed numbers, and some sellers in this market sector may have to temper their price expectations if they want to attract more buyer interest and get a sale. It says one of the contributing factors to larger home sales lagging is a reduction in pandemic-driven lifestyle changes. The amount of buyers enquiring to move over 50km from where they live is now 15%, the same level as 2019 and below the pandemic high of 18%.
Mortgage rates down
Mortgage rates are down from last year’s peak, with average rates for a 15% deposit five-year fixed mortgage now 4.65%, down from last month’s 4.75%, and October’s 5.89%, though this compares to 2.48% this time last year. With the budget announcement, came the OBR (Office for Budget Responsibility) statement that inflation is likely to reduce more quickly than previously forecast to 2.9% by the end of 2023. Rightmove says this is positive news and the Bank of England may temper rate rises and cut them more quickly than previously anticipated. However, it reports, market conditions are changeable, and we’ll have to see how the mortgage market reacts over the coming weeks.
“Lagging sales agreed in the larger homes sectors are likely to be caused by a combination of factors including fewer pandemic-driven moves to bigger homes, a more cautious approach to trading up due to the cost of living, and even perhaps concern over the running costs of a larger home,” said Tim Bannister.
He added: “Meanwhile sales in the first-time buyer sector are likely being helped by some deposit assistance from family. The differing performance of smaller and larger homes highlights the multi-speed, hyper-local market. Sellers looking to take advantage of traditionally strong buyer interest during the spring moving season should seek the expertise of a local estate agent, who will have their finger on the pulse and be best placed to advise on their local market.“
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