Average asking prices of properties coming to the market have increased by 1.1% month-on-month – around £4,207 – to £372,324, a report has found.
According to Rightmove’s House Price Index, this is around £570 short of the asking price record set in May last year.
The report stated that the annual rate of house price growth is 1.7%, which is the highest level for 12 months.
Rightmove noted that a “key factor” behind the growth in asking prices was due to the largest homes, “top-of-the-ladder” area of the market seeing the strongest start to the year for price growth since 2014.
The firm was still “price-sensitive” and “operating at different speeds”, with prices and activity rising more sedately in the first-time buyer and second stepper segments, which tend to be more mortgage-dependent.
It highlighted that the number of new sellers in both sectors was up by 10%, and the number of sales agreed up by 9% and 13% respectively compared to last year.
New sellers to market and number of sales agreed growing
Rightmove said that the number of new sellers to the market has increased by 12% compared to the same period last year, and the number of sales agreed has gone up by 13% year-on-year.
The largest growth is in the “top-of-the-ladder segment”, with new sellers rising by 18% year-on-year and the number of new sales being agreed up by 20%.
Rightmove noted that the number of new sales being agreed was in step with 2019 levels, despite buying conditions being more “challenging” with average mortgage rates being higher and average property prices being higher. The report noted that strong average growth has helped affordability.
The report highlighted that the 28 March saw the highest number of new sellers coming to the market in one day so far this year, and the third-largest since August 2020.
Rightmove continued that there was a “window of opportunity” for those considering a move to act, as a busy summer of sporting events followed by a general election could create more “homemover distractions” later in the year.
Housing market still ‘price-sensitive’
Tim Bannister, Rightmove’s director of property science, said that the “top-of-the-ladder sector” continues to “drive pricing activity at the start of the year, with movers in this sector typically less sensitive to higher mortgage rates, and more equity-rich, contributing to their ability to move”.
He continued: “While some buyers, across all sectors, will feel that their affordability has improved compared to last year due to wage growth and stable house prices, others will be more impacted by cost-of-living challenges and stickier than expected high mortgage rates.
“Despite these factors, it has been a positive start to the year in comparison to the more muted start to 2023. However, agents report that the market remains very price-sensitive, and despite the current optimism, these are not the conditions to support substantial price growth.
“Sellers who are keen to secure their sale will still need to price realistically for their local market and avoid being overambitious at the start of marketing to give themselves the best chance of finding a buyer.”
Bannister said that the summer holidays were typically a “time of distraction” for some home-hunters and they would briefly pause their search.
He pointed to Euro 2024, the Olympics this summer, and a general election later this year as things that would “add more buyer distractions than usual”.
“While affordability is still very tight, property and mortgage market conditions remain stable, buyer choice is good, and many sellers will recognise that it is the right time to negotiate on price to agree a deal. The boost in activity suggests that many home movers are already springing into action to make their move,” Bannister said.
Housing market ‘continued to play catch-up’
Nathan Emerson, CEO of Propertymark, said that many buyers and sellers were “keen to start buying their next dream home during a brighter period of the year, they can do so knowing that their homes are increasing in value yet again, and this is despite the fact that interest rates remain the same in order to stabilise the economy following surging inflation”.
He added: “People are demonstrating a pragmatic attitude towards current market conditions, and our own Housing Insight Reports are a key indication of how positive the market is starting to look, with an 18% increase in new properties coming to the market.
“Approvals for remortgaging also increased, from 30,900 to 37,700 since February, according to the Bank of England’s Money and Credit report. Therefore, if you want to buy your next house, now is the best time to do so.”
Jeremy Leaf, North London estate agent and a former Royal Institution of Chartered Surveyors (RICS) residential chair, continued that the “market continues to play catch-up as the increase in new enquiries is emboldening sellers, not only to make their properties available, but chance their arm at higher asking figures”.
“The prospect of more stable or even falling mortgage rates is certainly helping to improve confidence generally. However, the uplift in supply has meant more choice so the market remains price-sensitive and buyers are negotiating hard, particularly those who require little or no finance,” he added.
Tomer Aboody, director of property lender MT Finance, said: “With a pick-up in sales providing further confidence in the market, we are seeing the fruits of a stable interest rate environment, combined with reduced inflation, all contributing to an increase in asking prices.
“With the announcement that the Government may be looking to introduce another stamp duty restructure in the autumn ahead of the general election, this will provide a further boost for the housing market, saving buyers thousands of pounds.”
