Housing market bounce pushes prices close to new record
Adapted from a Rightmove Property News article 22 April 2024
The average asking price of a home in Britain has risen by 1.1% since March, to £372,324.
This is in line with the sort of rise we usually see at this time of year, and brings average prices to within just £570 of their all-time record, which they reached back in May 2023.
This is mostly being driven by an increase in the average asking price of ‘top-of-the-ladder’ homes, which are typically the highest-priced properties. These homes – which include four-bedroom detached houses, and properties with five or more bedrooms – have also seen the strongest start to the year for price growth in 10 years.
Why is there more activity at the top of the market right now?
In the aftermath of the mini-Budget in September 2022, mortgage rates rose sharply, which caused some home-movers looking for top-of-the-ladder homes to pause their plans.
But we’re now seeing the release of a long period of pent-up demand in this sector. More sellers of these larger homes have put their properties on the market than last year (+18%). There has also been an increase in the number of sales agreed across all property types, but the biggest sales boost has been for top-of-the-ladder homes (+20%) when compared to the same period in 2023.
In response to this jump in activity, new sellers are feeling they’re able to set their asking prices higher than a year ago.
Our property expert, Tim Bannister, says: “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 combined with elevated mortgage rates.”
First-time buyers are often looking to take out a mortgage within a higher loan-to-value (LTV) bracket – and these tend to come with the highest mortgage rates. In comparison, those further up the ladder will often have larger deposits, and more equity in their homes. This often means they need to borrow less, so they’re offered the lowest available mortgage rates.
There’s also a general trend of more stability in the mortgage market right now. There have been fewer headline-grabbing fluctuations of mortgage rates, which saw many movers pause their plans until the market became steadier.
What’s been happening to house prices over the past year?
Throughout the second half of 2023, we saw average asking prices drift down marginally, ending the year around 1% lower than they were 12 months previously.
But after a record number of sellers put their homes on the market on Boxing Day 2023, and a strong start to the spring selling season, we’ve seen average asking prices edge back up, and they’re now 1.7% higher than they were at this time last year.
The increased activity in the housing market we’ve seen at the beginning of this year has fed into the rise in asking prices. This is because new sellers putting their homes on the market aren’t feeling the need to lower their asking prices in the hope of finding a buyer.
Is now a good time to move?
The positive activity levels we’re seeing this Spring shows that many would-be movers are thinking that now is the right time for them to find their next home, particularly before the typically quieter summer months.
“In addition to the holiday season, 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,” says Tim.
The header image for this article was provided courtesy of The Agency UK, Covering Nationwide in the original Rightmove article.
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