The positive start to the year continues, according to the latest figures from Rightmove, with average prices of newly marketed properties rising by 1.5% this month to £368,118.
The market is continuing to recover following a muted 2023, with increasing levels of buyer demand and a higher-than-usual March boost to newly marketed properties.
Rightmove recorded an increase in buyer demand, measured by people sending enquiries to estate agents, and stronger sales numbers than a year ago. This, alongside the usual Spring optimism, has put upward pressure on prices. This month’s 1.5% price growth is notably higher than the average historic March increase of 1.0%, and the biggest monthly increase in prices for 10 months.
However, average asking prices are still £4,776 below the May 2023 peak and the increase in buyer activity suggests that more are seeing a window of opportunity to buy. Higher activity at the start of this year compared to last year must also be looked at in the context of the more cautious start to 2023.
Rather than the start of another market surge, the signs are that overall activity levels have now returned to steadier pre-pandemic norms. However, the elevated level of mortgage interest rates means that the increased activity is skewed towards those buyers who are less sensitive to higher mortgage costs.
Rightmove’s Tim Bannister said: “March is typically a strong month for asking price growth, as both buyer and seller activity levels rise and the spring selling season gets underway.
"However, the stronger-than-usual price growth this March indicates that new sellers are feeling much more confident, with some perhaps being over-optimistic, that there is enough buyer activity and affordability in their local market to achieve a higher price.
"Despite the above average price increases in this opening three months of the year, asking prices are still £4,776 below their peak in May 2023. For those who can afford to buy and have yet to take action to move this year, this may provide a window of opportunity to buy as we now seem to be past the bottom of the market.
"While some sellers are still being over-optimistic with their pricing expectations, there are also more sellers who are aware of the need to be negotiable and realistic, with elevated interest rates compared to recent years still stretching affordability for many buyers.”
Sales
Since the beginning of March, the number of sales being agreed is 13% higher than at the same time last year, continuing to pave the way for a higher number of transactions this year than the one million in 2023. Leading these higher sales agreed numbers is the less mortgage-rate-sensitive, top-of-the-ladder sector, where agreed sales are now 18% higher than last year.
It is also the largest homes sector which is driving more people to get in touch with estate agents than at this time last year. In March so far, buyer demand for top-of-the-ladder properties is 12% higher than the same period last year, compared with 8% higher overall for all property types.
London has seen the biggest increase in buyer demand, both overall and for top-of-the-ladder properties, compared to this time last year. The return to the office, wage increases, stable house prices and the slowing of inflation have all played their part in increasing buyer interest in living in the capital again.
Effects of the Budget
However, agents report that despite this better-than-expected start to the year, the market is still sensitive to pricing and external events. For example, last week’s lacklustre Budget, with not one measure announced to directly support first-time buyers or help the mortgage market, has tempered the growth we were seeing in buyer demand.
Rightmove’s real-time data shows an immediate pause in interest from some buyers following the Budget, in response to the disappointing scarcity of housing announcements.
Time on market
The average time to find a buyer is now 71 days, which is the longest at this time of year since 2019. Agents report that buyers are quickly cherry-picking attractively priced properties, whilst over-priced properties are taking much longer, pushing the average time to find a buyer up.
Meanwhile, after several weeks of creeping rate rises, the average 5-year mortgage rate is now 4.84% compared to 4.64% five weeks ago, continuing to test buyer affordability.
Tim Bannister concludes: “It’s been a positive first three months of the year for the market and better than many anticipated. However, we know from last year how quickly the picture can change with some negative economic news or surprises, evidenced in Rightmove’s data which captured the immediate buyer reaction to the lack of major housing initiatives in the Spring Budget.
"Sellers are right to feel more confident and optimistic this year, but buyer affordability remains stretched and higher mortgage rates are an ongoing challenge. With the market still sensitive to pricing and external events, some caution and willingness to negotiate is advised for sellers who are keen to find a buyer in the Spring market.”
Nathan Emerson, CEO of Propertymark, comments: “Following three years of economic turmoil, Propertymark is hopeful that we are now witnessing a positive trend towards increased prosperity in the housing market. For months, people have taken a hit on their property prices in order to find an affordable middle ground to enable a home move.
“Now that balance is being better struck and with interest rates remaining stable, we are seeing signs of normality and strong overall indicators now is an attractive time to buy or sell property.
"Our member agents have reported an 80 per cent increase in the number of new properties available and a 129 per cent increase in the number of market appraisals undertaken, showing there is growing appetite amongst buyers and sellers alike.”
