This upbeat appraisal and all these stats come from Rightmove, which says the average asking price of property coming to the market has risen by 1.1% (+£4,207) this month to £372,324, just £570 short of the record in May 2023, while the annual rate of price growth is now +1.7%, the highest level for 12 months.
A key factor behind this growth towards a near-record average price is the largest homes, top-of-the-ladder sector, which is seeing its strongest start to the year for price growth since 2014.
However, the website insists the the market remains price-sensitive, and operating at different speeds, with prices and activity rising more slowly in the more mortgage dependent first-time buyer and second-stepper sectors.
“The top-of-the-ladder sector continues to drive pricing activity at the start of the year, with movers in this sector typically less sensitive to higher mortgage rates, and more equity rich, contributing to their ability to move” says Riughtmove’s market guru, Tim Bannister.
“While some buyers, across all sectors, will feel that their affordability has improved compared to last year due to wage growth and stable house prices, others will be more impacted by cost-of-living challenges and stickier than expected high mortgage rates. Despite these factors, it has been a positive start to the year in comparison to the more muted start to 2023.
“However, agents report that the market remains very price-sensitive, and despite the current optimism, these are not the conditions to support substantial price growth. Sellers who are keen to secure their sale will still need to price realistically for their local market and avoid being overambitious at the start of marketing to give themselves the best chance of finding a buyer.”
By contrast, activity is rising more slowly in the mass-market, more mortgage-dependent first-time buyer and second-stepper sectors, which makes up the majority of the market.
The number of new sellers in both sectors is up by 10%, while the number of sales agreed is up by a more modest 9% and 13% respectively compared with last year. Mortgage rates are remaining high for longer than some expected at the start of this year, which is likely having a greater impact on movers in these sectors.
Overall, the number of sales being agreed is now level with 2019 despite buyer conditions being much more challenging, with the average five-year mortgage rate now at 4.84%, compared with 2.45% in April 2019, while average property prices are 22% higher. However, affordability has been assisted by average wage growth of 27% over this time-period, slightly ahead of house price growth.
But Rightmove is warning that there may be a market lull to come for a variety of reasons.
Bannister says: “The summer holidays are typically a time of distraction for some home-hunters, as they temporarily pause their search and head abroad or to the British seaside.
“In addition, the Euro 2024 football tournament and the Olympics this summer, likely followed by a General Election during the second half of the year, will add more buyer distractions than usual. There appears to be a tempting window of opportunity for those who are considering a move to act now before these distractions arrive.
“While affordability is still very tight, property and mortgage market conditions remain stable, buyer choice is good, and many sellers will recognise that it is the right time to negotiate on price to agree a deal. The boost in activity suggests that many home movers are already springing into action to make their move.”
