NEAR-RECORD ASKING PRICES REFLECT ROBUST SPRING SALES MOMENTUM

Tuesday April 23, 2024

The housing market is experiencing a robust resurgence, with property prices nearing record highs, driven particularly by the top tier of homes. Spring sales are signaling a significant rebound in the market, as indicated by the soaring average asking price of properties listed for sale. According to data from property portal Rightmove, the average asking price now stands just £570 shy of last year’s May record of £372,894. Moreover, the annual price growth has reached 1.7%, marking its highest level in the past 12 months.

A notable factor fueling this growth is the prominence of high-value properties, often referred to as “top-of-the-ladder” homes. These luxurious estates have played a pivotal role in propelling the market to its strongest start in over a decade. However, despite the current buoyancy, apprehensions linger regarding the timing of potential interest rate adjustments by the Bank of England, which could dampen this upward trajectory.

The average asking price has surged to £372,324, representing a notable increase of £4,207 compared to the previous month. Nonetheless, sellers are cautioned against setting overly ambitious price tags. Tim Bannister, a director at Rightmove, emphasizes the importance of realistic pricing strategies tailored to local market conditions. Overpricing at the onset of marketing could hamper the chances of securing a sale in a price-sensitive environment.

The influx of new sellers entering the market in April has contributed to a 12% rise compared to the same period last year. Consequently, there has been a corresponding 13% increase in the number of sales agreed upon. At the upper echelons of the market, there has been an even more pronounced uptick, with an 18% rise in property listings and a 20% increase in sales recorded.

Despite the optimism surrounding more stable or potentially declining mortgage rates, buyers remain discerning, especially those with minimal financing requirements. Mortgage rates, which peaked in July 2023 at 6.86%, have since moderated. However, recent upticks in mortgage rates, fueled by higher-than-anticipated inflation figures, have cast uncertainty over the likelihood of imminent interest rate cuts by the Bank of England.

Tom Bill, head of UK residential research at Knight Frank, underscores the mixed economic signals confronting buyers and sellers. While rising asking prices reflect improved seller confidence, broader pressures such as rising mortgage rates and increased supply could temper price growth. Moreover, the uncertainty surrounding interest rate cuts further complicates pricing dynamics, leading to heightened negotiation between buyers and sellers.

Nick Mendes, of mortgage brokerage John Charcol, observes a recent slowdown in activity as mortgage rates stabilize, with some buyers holding out for potential rate reductions. He cautions against relying solely on asking prices, advising buyers to reference Land Registry data for accurate sale prices. This caution reflects the nuanced landscape of the housing market, where astute pricing strategies and informed decision-making are essential amidst evolving economic conditions.