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Housing market better than expected as buyers return

Increasing numbers of buyers are returning, with the market starting 2023 much better than expected - Rightmove February 2023

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Originally posted: 22nd February, 2023

Latest look at buyer demand shows the number of people getting in touch with agents is up by 11%

A better than expected housing market has surprised many as buyers return, reports Rightmove in its latest House Price Index (February 2023).

It says that increasing numbers of buyers are returning, with the market starting 2023 much better than expected.

The latest look at buyer demand shows the number of people getting in touch with agents is up by 11% in the last two weeks against the same period in 2019’s more normal market.

The agreed number of sales continues to rebound, and is now only 11% below 2019’s levels, recovering from 15% down at the beginning of the year, and 30% down during the aftermath of the mini-budget.

Mortgage rates

Rightmove reports that average rates for a 15% deposit five-year fixed mortgage now stand at 4.82%, down from 5.9% in October.

While there remains an overall shortage of property for sale, down by 24% against 2019, there is increased choice for buyers than a year ago, which gives prospective buyers confidence of finding their onward move. The number of homes available for sale has increased by 48% on the record low levels of last year, and the current slower-paced, greater-choice housing market appears to be suiting the group of buyers who need to get a mortgage and who previously lost out to cash buyers in the hectic best bid scenarios of recent years, says Rightmove.

Interestingly the latest sales agreed figures reveal that it’s the first-time buyer sector that is recovering better than the upper-end sector.

Asking prices

Average new seller asking prices stay flat this month, increasing by only £14 (+0.0%), which is the smallest ever increase from January to February. Rightmove says this is a sign that more sellers are heeding agents’ advice and pricing right first time, and also that prices remaining flat rather than dropping as some expected could be seen as a positive indicator for the year to come. It adds that changes from a fast to a slower-paced housing market have historically had various paths, and whilst it’s early days, the combination of more realistic asking prices and an improving picture on the number of sales being agreed suggests “a softer landing for the market than many expected”.

“Transitioning into a slower paced market”

Tim Bannister, Rightmove’s Director of Property Science, said: “The big question this month was whether we would see new sellers increasing their asking prices as has been the yearly norm as we approach the spring selling season. This month’s flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint. In addition to market conditions demanding greater realism on price, we are transitioning into a slower paced market, where buyers will take longer to find the right property at the right price due to the higher cost of servicing a mortgage. There are other indicators that this will be a softer rather than a hard transition despite the turbulence at the end of 2022. Homeowners who are coming to market in the upcoming spring season should use their agent’s expertise and get the price right the first time, which can really help to find the right buyer more quickly.”

“Frantic market of recent years was unsustainable”

He added: “The frantic market of recent years was unsustainable in the long term, and our key indicators now point to a market which is transitioning towards a more normal level of activity after the market turbulence at the end of last year. Agents are reporting that they are now increasingly seeing buyers who have more confidence and more choice albeit with revised budgets to accommodate higher mortgage rates. It’s a positive sign for the market to see many in the first-time buyer sector getting on with their moves, though despite average mortgage rates having edged down, some first-time buyers will still be priced out of their original plans and may need to look for a cheaper property, save a bigger deposit, or factor higher monthly mortgage repayments into their budgets.”

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