"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"
Average prices of properties entering the market jumped by +£6,647 - hitting a new record of £372,894 with Rightmove saying that "current market conditions are defying expectations."
Earlier in the spring season, some caution was noted among new sellers on asking prices despite positive signs for activity levels, as home-movers continued to navigate the fallout from the mini-Budget. Now, with buyer demand 3% higher than in 2019 and sales agreed just 3% behind 2019’s levels, this positive activity has belatedly filtered through to new sellers’ asking prices.
However, the current market is still price-sensitive and buyer affordability is still stretched. Whilst increased seller pricing confidence in the first-time-buyer and second-stepper homes sectors has more justification, there are some signs of over-optimism in the top-of-the-ladder 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.”
The average discount from the final asking price to the agreed sale price has steadied at an average of 3.1%, in line with pre-pandemic market levels. More predictable price patterns reflect home-mover confidence in the more normal market this year, following the uncertainty at the beginning of the year.
Sellers with larger properties in danger of being over-optimistic
Buyer enquiries to agents about homes for sale are now 3% higher than at this time in the pre-pandemic market of 2019. This is led by the first-time-buyer and second-stepper sectors, with buyer demand now 6% and 3% above pre-pandemic levels respectively. However, there are signs of some over-optimism in the top-of-the-ladder sector, which has the fastest-rising prices this month despite buyer demand in this sector being 1% lower than at this time before the pandemic.
While properties in this largest-homes sector are still selling faster than in 2019, it is now taking an average of 67 days to agree on a sale, nearly double the 35-day average at this time last year. This is the biggest increase in the time taken to find a buyer, with second-stepper properties now taking 52 days on average compared to 28 days last year, and first-time-buyer properties now taking 53 days, up from 35 days a year ago.
A steadying in average fixed-rate mortgages is also contributing to greater home-mover confidence. The average rate for a five-year fixed, 15% deposit mortgage is now 4.56%, down from 5.89% in October.
To add some further context, this compares to 4.52% last week. With mortgage rates starting to remain relatively stable week-to-week despite a further Bank of England increase in the base rate, home-movers can more easily understand and plan for the expected costs of their mortgage.
Tim Bannister concludes:
“This month’s record price is a strong indication of sellers’ confidence, and we can see from activity levels and the still relatively limited choice of property for sale that this confidence is justified in some segments of the market.
"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 home-movers to plan ahead.”
