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House prices reach record high in May as market confidence returns

Nick Cheek
Written By:
Nick Cheek

The average price of a home coming to market reached £372,894 in May, data from a property portal has shown.

According to Rightmove’s house price index, the 1.8% monthly price growth was also the biggest seen so far this year, and higher than the 1% growth typically seen during May. This represented a £6,647 increase in the average asking price. 

Annually, asking prices were 1.5% up on this time last year. 

Tim Bannister, director of property science at Rightmove, 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.” 

He said one reason for this rise in confidence was that predictions for a major downturn in the market were looking “increasingly unlikely”.  

Bannister said: “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.” 

Sustained buyer demand 

The firm indicated that activity in the market was healthy, with agreed sales numbers just 3% down on pre-pandemic levels and buyer demand 3% higher. 

Rightmove said first-time buyers and second-time buyers were driving most of the activity, with demand now 3% and 6% higher than in 2019 respectively. 

It said buyers at the top of the ladder, who typically purchase larger homes, were displaying signs of “over-optimism”, as prices at this level rose the fastest despite 1% drop in buyer demand when compared to 2019. 

By comparison, first-time buyer homes saw a 0.6% monthly rise in average asking prices to £226,399, while second-stepper homes rose 0.7% to £341,567. Meanwhile, top-of-the-ladder property asking prices jumped by 2.8% since last month to £685,068. 

Annually, these represented rises of 1.5% for first-time buyer homes, 1.3% for second-stepper homes and 0.6% for top-of-the-ladder homes. 

Bannister added: “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.” 

Rightmove’s data showed that the average discount from final asking price to agreed sale price was 3.1 per cent, in line with pre-pandemic levels. 

Average sale times

Rightmove said homes at the top of the ladder were selling faster than in 2019, at an average of 67 days. However, it noted that this was slower than the 35-day average last year and was the biggest increase in time compared to other property types. 

Second-stepper homes are now taking 52 days on average to sell, compared to 28 days in 2022, and first-time buyer homes are taking 53 days, up from 35 days last year. 

The average number of properties held on estate agent books rose slightly from 45 in April to 47 in May. 

Bannister said: “More discretionary sellers at the top-end may be prepared to price high and wait for the right buyer, and whilst it is positive that they appear to feel no financial pressure to sell, the data suggests that some sellers in this sector will need to price more competitively if they want to find a buyer in the current market.  

“A more stable mortgage market is good news, and after a period of rapid rate rises followed by some significant falls this year, this period of relative stability will help homemovers to plan ahead.”