As the flowers bloom and the sun shines brighter, the UK housing market is experiencing its own kind of growth. According to the latest report from property listing platform Rightmove, the average asking price for new sellers this month has increased by 1.1%, or £4,207, reaching £372,324.
This rise falls in line with the 10-year average for April, positioning current prices just £570 below the record high set in May 2023. Additionally, the annual growth rate in property prices has climbed to 1.7%, marking the highest increase in the past year. Much of this growth is attributed to the luxury housing sector, where large homes have seen significant price increases, making it the most robust start to the year since 2014.
However, despite this surge in activity, challenges persist, particularly concerning affordability. High mortgage rates continue to pose obstacles, particularly for first-time buyers and second-steppers who rely heavily on mortgages to enter the market.
Tim Bannister, Rightmove’s director of property science, highlighted the dichotomy within the market: while some buyers benefit from wage growth and stable house prices, others face hurdles due to high mortgage rates and cost-of-living pressures.
“It has been a positive start to the year in comparison to the more muted start to 2023,” Bannister acknowledged. “However, the market remains very price-sensitive, and these conditions do not support substantial price growth. Sellers need to price realistically for their local market to secure their sale.”
The latest Rightmove House Price Index also reveals interesting trends in seller behaviour. Compared to last year, there has been a 12% increase in new sellers, with sales agreed up by 13%. Notably, the luxury sector has experienced an 18% rise in new sellers and a 20% increase in sales agreed, indicating a growing confidence among homeowners in this segment.
Conversely, the mass-market sectors show more modest increases, with new sellers up by 10% and sales agreed rising by 9% and 13% for first-time buyers and second-steppers, respectively.
Despite the challenges, the total number of sales agreed has matched levels from 2019, underpinned by significant wage growth that slightly outpaces the rise in property prices. However, the average five-year mortgage rate currently stands at 4.84%, significantly higher than the 2.45% rate in April 2019.
Looking ahead, Bannister notes potential distractions for home-hunters, such as summer holidays, the Euro 2024 football tournament, and the Olympics, likely followed by a General Election during the second half of the year. Nevertheless, he suggests that now may be an opportune time for those considering a move to act before these distractions arise.
“While affordability remains tight, property and mortgage market conditions are stable, buyer choice is good, and many sellers are open to negotiation on price to secure a deal,” Bannister advises. “The increase in activity indicates that many home movers are already springing into action to make their move.”
As spring unfolds and the housing market continues to evolve, navigating these fluctuations with careful consideration and strategic planning will be key for both buyers and sellers alike.