Rightmove has reported that the average price of property coming to the market rose by 1.8% (+£6,647) during May to reach a new record of £372,894 in a delayed response to the higher-than-expected level of market activity since the start of the year.
It said the 1.8% monthly increase is the biggest of the year so far, and is significantly higher than the historic average May rise of 1.0%.
Meanwhile, agreed sales numbers are currently just 3% behind the last more normal pre-pandemic market of 2019.
The discount from final asking price to agreed sale price has steadied at an average of 3.1%, in line with normal market levels, reflecting home-mover confidence in the outlook for the market, Rightmove said.
Its latest house price index state that while increased price confidence appears to be more justified in the lower and middle market sectors, there are some signs of over-optimism in the top-of-the-ladder sector, as some discretionary buyers hang back. Buyer demand is 1% lower than in 2019 for top-of-the-ladder properties, compared with 3% above 2019’s level in the second-stepper sector, and 6% above in the first-time-buyer sector.
Tim Bannister, Rightmove’s director of property science, said: “This month’s strong jump in new seller asking prices looks like a belated reaction and a sign of increasing confidence from sellers, as we’d usually see such a big monthly increase earlier in the spring season. One reason for this increased confidence may be that the gloomy start-of-the-year predictions for the market are looking increasingly unlikely. What is much more likely is that the market will continue to transition to a more normal activity level this year following the exceptional activity of the pandemic years.
“Steadying mortgage rates and a generally more positive outlook for the economy are also contributing to more seller confidence, though there are likely to be more twists and turns to come. The market is still very price-sensitive and it is important that new sellers do not damage their prospects of a sale by overpricing initially and reducing later, with agents reporting that it’s the realistically-priced new instructions that are selling best.”
Peter Beaumont, CEO at specialist mortgage lender TML, added: “It’s no secret that house prices have been volatile over the course of the year, and while prices have risen according to Rightmove, it’s too soon to tell whether this trend will hold. However, as spring begins in earnest, buds of optimism are beginning to sprout within the market. Transaction levels have been rising, a key indicator that demand is beginning to return as consumers grow in confidence amongst predictions that the inflation rate will fall.
“However, with a further increase to the base rate this month, there will still be uncertainty around mortgage rates for those preparing to get onto the ladder or re-mortgage. First time buyers will be weighing up whether to stay renting despite increasing rental prices or take the plunge. Affordability remains a key challenge, and seeking guidance from a broker will ensure customers are able to obtain the right product for their circumstances.”