Property values still thousands below peak despite go...

The average price of property coming to the market for sale rises by 1.5% (+£5,279) this month to £368,118, as the market continues its recovery after a muted 2023.

The positive start to the year continues, with Rightmove recording 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 upwards 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 mean that the increased activity is skewed towards those buyers who are less sensitive to higher mortgage costs.

“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 … 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” explains Tim Bannister, Rightmove’s Director of Property Science.

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 this 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.

However, agents report that despite this better-than-expected start to the year, the market is still sensitive to pricing and external events.

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.

Bannister adds: “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.”

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