The month of May is a traditionally busy one in the property market, with strong appetite continuing the upwards momentum for UK house prices.
Thanks to the release of pent-up demand caused by last year’s uncertainty, buyers seem to have well and truly come down from the fence as UK house prices and transaction levels see healthy growth, according to the latest Rightmove house price index.
The average asking price for new property coming to the market now is at a record £375,131, after rising by 0.8% since the previous month – the equivalent of an average £2,807 per property. While UK house prices are only 0.6% higher than they were a year ago, it should be enough to boost buyer and seller confidence once more.
According to Rightmove, May is known for being a record-setting month, with new price records having been set in May in 12 of the previous 22 years. The fact that this year is no different when it comes to seasonal trends demonstrates the overall long-term resilience of the UK housing market.
Supporting growth in UK house prices
The property portal points to the fact that large numbers of buyers had opted to take a “wait and see” approach to any new purchases or house moves last year, in response to the wider economic landscape and rising mortgage rates. Now that the outlook is more positive, many of these buyers are beginning to proceed.
This is despite the fact that mortgage rates have stayed higher than some had anticipated at the start of the year, when lenders began to bring in more competitive deals. In recent weeks, some lenders have tipped their rates upwards again, while the Bank of England opted to once again hold its base rate at 5.25% at its latest meeting.
Most economists are still predicting multiple base rate cuts before the end of 2024, though, and this is expected to be reflected in the mortgage market – which in turn will have an upwards impact on property transactions and UK house prices.
Looking at how this is reflected the numbers, Rightmove notes that the number of sales agreed in the first four months of this year was 17% higher than last year. It also outstrips the 12% increase in the number of new sellers coming to the market in the same period, which again will buoy UK house prices.
Rightmove’s analysis also shows that there remains some price sensitivity in the market, so sellers are urged to “price right from the outset” to ensure their property sells. This is because homes that need an asking price reduction take more than three times longer to find a buyer than those that do not.
The strongest segments of the market
Despite some negative predictions last year that UK house prices would suffer “sharp falls” due to higher interest rates, Tim Bannister, Rightmove’s Director of Property Science, points out that the spring selling season has provided enough momentum to instead push prices to record highs.
“The top-of-the-ladder sector is still leading the way, while from a regional perspective the North East, with the cheapest average prices in Great Britain, has seen the strongest price growth.
“However, it’s important to remember that prices overall are still only 0.6% ahead of this time last year. The market remains price-sensitive, and with prices reaching new records in the majority of regions and mortgage rates remaining elevated, affordability for many home-buyers is still stretched.”
UK house prices still affected by supply
Meanwhile, Nathan Emerson, CEO of Propertymark said: “Spring heading into summer is traditionally a busy time for the housing market and these latest figures may prove an ideal inspiration for sellers to use this as an opportunity to place their property on the market.
“Propertymark’s own Housing Insight Report demonstrates that there has been a recent 4 per cent increase in the number of potential buyers registered at each member branch, representing a strong appetite for buying and selling homes currently.
“Buyers and sellers are adapting to current inflation levels and higher interest rates, however the more these two factors come downward, the more likely that there will be a further stimulation in housing market growth.
“With supply still being a central issue, with a general election on the horizon we hope all political parties focus on increasing the number of houses in the medium to long term.”
