House asking prices edge up ahead of traditionally busy spring-buying season

20th March 2023
Home > News > House asking prices edge up ahead of traditionally busy spring-buying season

Reported by MARC DA SILVA Property Industry Eye

The average price of property coming to market increased by 0.8%, or £2,906, this month, to £365,357 mainly due to a 1.2% jump in the largest homes sector, according to Rightmove.

But this rate of growth is below the average monthly rise of 1% seen in March over the last 20 years, reflecting a higher degree of pricing caution by many new sellers than is usually recorded at this time of year.

The exception to this caution is a 1.2% monthly price jump in the larger home top-of-the-ladder sector, in contrast to more modest 0.4% and 0.5% respective rises in the first-time buyer and second-stepper sectors.

Overall, new seller asking prices are now £5,800 below October 2022’s peak, with annual price growth continuing to ease and now at +3.0%. The data continues to point to a market on a much more stable footing than many anticipated and cautiously transitioning towards the activity levels of the more normal market of 2019.

Rightmove’s Tim Bannister said: “The beginning of the spring season sees stability and confidence continuing to return to the market as it recovers from the turbulence at the end of 2022. The pace of the market reached an unsustainable level in the last two years, and was on track to slow to a more normal level, though the speed of this slowdown to more normality was accelerated by the reaction to September’s mini-Budget.

“While higher mortgage rates and economic headwinds raise challenges, many potential home movers who were effectively side-lined in the frenetic bidding wars of the last two years will find that a slower-paced market gives them time to plan and secure their next move as we enter the traditionally busy spring-buying season.”

Typical first-time buyer type properties (two-bedrooms and fewer) are leading a cautious recovery, with sales agreed in this sector improving fastest. In the last two weeks, agreed sales are just 4% behind the same period in the more normal market of 2019. However, to put this into context they are 18% behind last year’s exceptional level.

The result of this increased buyer activity means that average asking prices for first-time buyer type properties are now remarkably just £500 lower than their peak last year. Given the rising cost of living and increased cost of taking out a mortgage, it is likely that many in this group are getting some support from family or have been able to avoid record rents and saved up a larger deposit by living with parents for longer.

By contrast and highlighting the current hyper-local and market sector differences, sales agreed in the last two weeks in the more discretionary top-of-the-ladder and second-stepper homes sectors are 10% and 13% behind the same period in 2019 respectively.

But while the modest 0.4% rise in average second-stepper asking prices reflects this more muted level of activity, the 1.2% rise in the most expensive property sector appears to be over-optimistic given the slower recovery in sales agreed numbers, and some sellers in this sector may need to temper their price expectations in order to attract more buyer interest and secure a sale.

One contributing factor to larger home sales lagging is a reduction in pandemic-driven lifestyle changes. The proportion of buyers enquiring to make a move over 50km away from where they live is now 15%, the same level as 2019 and below its pandemic peak of 18%.

Mortgage rates have fallen back from their peak last year, with average rates for a 15% deposit five-year fixed mortgage now 4.65%, edging down from last month’s 4.75%, and October’s 5.89%, though this compares to 2.48% this time last year.

Accompanying the budget announcement, the OBR statement that inflation is likely to reduce more quickly than previously forecast to 2.9% by the end of 2023 is positive news and the Bank of England may temper rate rises and reduce them more quickly than previously anticipated. However, market conditions are changeable, and we will need to see how the mortgage market reacts in the coming weeks.

Bannister added: “Lagging sales agreed in the larger homes sectors are likely to be caused by a combination of factors including fewer pandemic-driven moves to bigger homes, a more cautious approach to trading up due to the cost of living, and even perhaps concern over the running costs of a larger home.

“Meanwhile sales in the first-time buyer sector are likely being helped by some deposit assistance from family. The differing performance of smaller and larger homes highlights the multi-speed, hyper-local market.

“Sellers looking to take advantage of traditionally strong buyer interest during the spring moving season should seek the expertise of a local estate agent, who will have their finger on the pulse and be best placed to advise on their local market.”


Share this article
  • icon
  • icon

Related News Articles

Bank of England raises rates to 14-year high

The Bank of England today raised interest rates to 4% - a 14-year high and the 10th consecutive raise - making rates their highest since 2008 as double digit inflation continues to bite. The Bank of England today raised the base rate from 3.5% to 4% – a 14-year high and the 10th consecutive raise – making rates their highest since 2008 as double digit inflatio...

02/02/2023
UK rents rise at highest rates since 2016

The rising cost of renting has again hit its highest level since comparable records began in 2016, with strong demand from tenants. With fewer properties available to rent in many areas, the mismatch between supply and demand has pushed up costs for many people. Prices paid by UK renters rose by 5.3% on average in the year to July, the Office for Nati...

16/08/2023
March property sales edged previous month, HMRC reveals

Residential property transactions edged up 1% in March 2023 compared to the previous month, the latest HMRC figures have revealed. Across the UK, there were 89,560 home sales last month, according to the provisional seasonally adjusted estimate. While this was slightly higher than February’s total, it represents a 19% decline on the figure for the corresponding period of...

02/05/2023
BoE might need to cut rates ‘earlier and faster’ than thought, says Bank policymaker

The Bank of England may be forced to start reducing interest rates sooner than previously anticipated after raising them sharply in recent months despite signs of weaker inflation pressures, monetary policymaker Silvana Tenreyro said yesterday. Tenreyro, who cast one of two votes to leave borrowing costs on hold last month, while a majority of her colleagues on the Monetary Po...

06/04/2023