The average price tag on a home is only around £570 short of a record high reached in May last year, according to a property website.
Across Britain, the typical price of a property coming to market increased by 1.1% or £4,207 month-on-month in April, Rightmove said.
A key factor behind the growth towards near-record average prices according to the website is “top of the ladder” properties, with a jump in new sellers and sales agreed for bigger, family-sized homes.
By contrast, house prices and activity are rising more slowly in the more mortgage-dependent sectors of the market, including people taking their first and second steps on the property ladder, the report added.
The average new seller asking price across Britain is now £372,324.
The average asking price for a “top of the ladder” home in April is £682,661, up by more than £18,000 from £664,422 in March.
Overall, the first four months of the year have been “much improved” compared with 2023, with the market seeing boosts in both buyer and seller activity this spring, the website said.
Rightmove said that current sales are level with 2019, despite buyer conditions being much more challenging, with elevated mortgage rates plus house prices having grown by more than a fifth (22%) during the intervening years.
Affordability has been assisted by wage growth, Rightmove said.
Tim Bannister, Rightmove’s director of property science, said: “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.
“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.”
Mr Bannister suggested that there could be a “tempting window of opportunity” for some people to make moves before the summer holidays and a general election.
The findings were released as a report from the Building Societies Association (BSA) looked at the struggles for prospective first-time buyers in getting onto the property ladder.
The report said: “An important balance is the compromise between financial stability and first-time buyer numbers.
“The last decade has seen the balance tilted in favour of financial stability with the inevitable cost of many being excluded from home ownership. It is now time to debate the costs and benefits of the current approach.”
It added: “Those with single incomes, lower than average incomes,
or unstable incomes, and with less wealth have struggled to buy their own home and found themselves stuck in the private rented sector.”
Paul Broadhead, head of mortgage and housing policy at the BSA, said: “A properly functioning housing market is dependent on first-time buyers being able to afford their first home. Whilst building societies are creating bespoke, targeted innovations within the current regulatory framework, new thinking and radical changes are needed.”
Sellers are taking a smaller discount to secure a sale as more properties hit the market and mortgage rates increases hit pause, according to Zoopla.
Buyers are securing an average £10,000 (3.9%) discount to the asking price to make a deal in the first three months of the year, which is far less than the £14,250 average discount (4.5%) seen in November 2023. This is lowest level since July 2003, the figures from Zoopla’s monthly House Price Index show.
Discounts remain larger in London and the South East, where there is an average discount to asking price of 4.3% or £19,500.
Read more: Bank of England says UK is coping with higher interest rates
“We don’t believe that house prices are about to increase more quickly but there is more buyer interest. Sellers need to remain realistic on where they set the asking price if they are to take advantage of improving market conditions to secure a sale and move home in 2024,” Richard Donnell, executive director at Zoopla, said.
New sales agreed are 9% higher than a year ago, a trend that is encouraging more sellers to list their homes for sale with 20% more homes for sale compared to this time last year.
The property market has received a boost, with mortgage rates now at 4.4% for a 75% loan to value 5-year fix rate loan, down by over 1% from a high of 5.8% in June 2023. After years of ultra-low rates, 4% can still be considered high but far from the average two-year deal of 6.66% recorded during Liz Truss’ mini-budget.
“Rising wages and falling mortgage rates have boosted consumer confidence and this is feeding into improving levels of housing market activity over the first quarter of 2024. House prices are falling at a slower rate but it remains a buyers market where there is much greater choice of homes for sale,” Donnell added.
Read more: Renting now cheaper than owning amid high UK mortgage costs
The strongest growth in sales activity continues to be in areas with more affordable house prices such as Yorkshire and The Humber (11%) where the average house price is £185,600 and the North West (13%) with an average house price of £194,500. The strongest growth in new sellers listing homes is in the South West (28%) and North East (26%).
The average estate agent had almost 30 homes for sale in the first three months of 2024, a return to the pre-pandemic average. This means buyers have more choice and room to negotiate, especially where homes are failing to attract buyer interest.
“While we’re yet to see interest rates fall there’s no doubt that the certainty brought about by a continued freeze has helped to improve market sentiment considerably. Despite the disappointment of the Spring Budget, buyer confidence is building and there remains a strong appetite to transact in 2024,” Marc von Grundherr, director of Benham and Reeves, said.
Watch: UK house prices creep up as experts predict ‘smoother year’ for buyers and sellers
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London’s housing market is continuing to bounce back after its slump, with house prices down just 0.4 per cent year on year for February 2024.
The average sold house price in London is now £534,000, according to the latest Zoopla House Price Index.
Sellers are now accepting £19,500 below asking price on average, a 4.3 per cent reduction, compared to £25,000 (6.1 per cent reduction) in November 2023.
There are eight per cent more homes on the market in London.
Croydon saw the biggest positive change in house prices annually, rising 2.4 per cent per cent with an average house price of £392,100.
Ealing and Bromley both saw the biggest drop in house prices, down 0.8 per cent to £514,000 and £513,000 respectively.
Still a buyer’s market
Zoopla said that lower mortgage rates in anticipation of the Bank of England eventually lowering the base rate from 5.25 per cent underpinned this spring bounceback.
“House prices are falling at a slower rate but it remains a buyers market where there is much greater choice of homes for sale,” said Richard Donnell, executive director at Zoopla.
“We don’t believe that house prices are about to increase more quickly but there is more buyer interest,” Donnell added.
“Sellers need to remain realistic on where they set the asking price if they are to take advantage of improving market conditions to secure a sale and move home in 2024.”
Compromise on price
Marc von Grundherr, director of Benham and Reeves, agreed that making sure an asking price was realistic in the first place remains key, especially if the seller is keen to move home quickly.“Price remains the key compromise for sellers when it comes to securing a buyer in today’s market, with higher mortgage rates continuing to restrict buyer purchasing power,” said Grundherr.
“However, the gap between this purchasing power price point and seller asking price expectation has narrowed and we’re finding that sellers are more than happy to oblige in order to make their move.”
In some parts of London it can take as long as 241 days on average to sell a home.
Zoopla forecast that house prices won’t start rising again that quickly, as more homes continue to come onto the market and provide buyers with options.
However, London is lagging behind the rest of the country in terms of supply, with 20 per cent more homes for sale in the UK compared to this time last year.
Market getting busier
Nationally, house prices are down 0.3 per cent year on year, with sellers accepting an average discount of £10,000 (3.9 per cent) from their original asking price.
Matt Thompson, head of sales at Chestertons, said the property market continued to improve this month.
“In March, the property market witnessed steady demand from buyers although some house hunters decided to pause their search in the hope for major incentives to be announced in the Spring Budget. As this wasn’t the case, the majority of these buyers have since resumed their property search,” Thompson explained.
“As a result, March concluded the first quarter of the year with a busy property market — particularly in the capital where demand continues to outstrip supply.”
The average asking price for a house in London is now £686,844, up 0.6 per cent from February, according to the latest Rightmove house price index.
Some boroughs have seen asking prices rise by 5.6 per cent annually.
The property portal is reporting that buyer demand for homes in London is stronger than anywhere else in the UK.
Companies demanding workers return to the office, slowing inflation and the stabalising of house prices have all been cited as reasons for this uptick in demand.
“While mortgage affordability remains an issue, it certainly hasn’t dampened the appetite of London buyers,” said said Marc von Grundherr, director of Benham and Reeves
“We’ve continued to see a high level of activity at all price thresholds, but particularly across the super prime market,” he added.
“Buyers at the very top end of the ladder are acting with great confidence, with the higher cost of borrowing not presenting the same obstacle as the average homeowner.”
“Buyers at the very top end of the ladder are acting with great confidence.”
This tracks with Rightmove’s borough-level data, which shows asking prices have risen sharply in some of the capital’s most traditionally expensive boroughs.
Richmond-upon-Thames has seen asking prices shoot up 5.6 per cent since last year, with the average home now priced at £949,555.
They’re also up 5.6 per cent in Hammersmith and Fulham, where the average home now has an asking price of £1,010,417.
Westminster, right in the heart of prime London, has seen asking prices up 4.7 per cent and an average house price currently sitting at £1,526,159.
Kensington and Chelsea has bucked this trend, with house prices dropping 0.3 per cent since last year. But with an average asking price of £1,667,168, it’s still the most expensive part of London to buy in.
“Some house hunters decided to pause their search in the hope for major incentives to be announced in the Spring Budget.”
However, Rightmove cautioned that this enthusiasm for a London property spending spree has been tempered somewhat by the “lacklustre” Spring Budget 2024, which all but ignored tax incentives for first-time buyers.
“In March, the property market witnessed steady demand from buyers although some house hunters decided to pause their search in the hope for major incentives to be announced in the Spring Budget,” said Matt Thompson, head of sales at Chestertons.
“As this wasn’t the case, the majority of these buyers have since begun resuming their property search. As a result, we expect for March to conclude the first quarter of the year with a busy property market – particularly in the capital where demand continues to outstrip supply.”
London’s most affordable borough, in the sense that anywhere in the capital could be described as affordable, is Barking and Dagenham, where the average home is priced at £360,537 and asking prices are down 2.6 per cent annually.
Croydon, where the average property price is currently £484,795, has seen asking prices drop 0.6 per cent since this time last year.
Camden’s market remains the most volatile, with the lowest annual drop of 3.2 per cent, but a monthly increase of 1.5 per cent and a high average house price of £1,085,835.
It now takes 73 days on average to find a buyer in London.
“More listings mean buyers are often spoilt for choice, so are not rushing to take the plunge,” said north London estate agent Jeremy Leaf.
“Only realistically-priced property [are] attracting attention,” he explained.
“Those sellers who appreciate that if they receive enquiries in the early days of marketing, they are much more likely to find a buyer, are taking most advantage of increased demand.”
House prices across the UK are up 1.5 per cent across the UK in March – higher that the 22-year average of a one per cent monthly increase for the country.
Rightmove reported that sales agreed are up by 13 per cent compared to this time last year, and buyer demand is up eight per cent.