"We expect that the improved market activity levels and conditions this year will result in higher transaction numbers at the end of 2024 than last year"
- Tim Bannister - Rightmove
The average price of property coming to the market for sale has risen by 0.8% this month (+£2,807) to a new record of £375,131, according to the latest market analysis from Rightmove.
May is typically a strong month for price growth, with new price records having been set in May in 12 of the previous 22 years. Price growth is still led by the largest-homes, top-of-the-ladder sector, with prices in this sector up by an average of 1.3% compared with last year.
However, since the last price record set a year ago in May 2023, average prices are only 0.6% higher overall, a reminder that the market remains very price-sensitive.
Rightmove’s Tim Bannister comments: “Some predicted that property prices would suffer sharp falls and take a while to recover following the Bank of England increasing the Base Rate up to 5.25%, where it has remained since August 2023.
"The momentum of the Spring selling season has exerted enough upward price pressure to reach a new record asking price. The top-of-the-ladder sector is still leading the way, while from a regional perspective the North East, with the lowest average prices in Great Britain, has seen the strongest price growth.
"Nonetheless, it’s important to remember that prices overall are still only 0.6% ahead of this time last year. The market remains price-sensitive, and with prices reaching new records in the majority of regions and mortgage rates remaining elevated, affordability for many home-buyers is still stretched.”
Demand
Pent-up demand is a key driver behind increased buyer and seller activity, despite mortgage rates remaining elevated for longer than anticipated. In the first four months of the year, the number of sales being agreed between buyers and sellers is 17% higher than in the same period in 2023, outstripping the 12% increase in the number of new sellers coming to market.
Top of the ladder
Like pricing activity, these trends are being driven most by the top-of-the-ladder sector, made up of four-bedroom detached and five-bedroom plus properties. A lack of available homes for sale in this sector during the pandemic years, together with the rapid rise, and subsequent volatility of mortgage rates in the post-mini-Budget period, meant that activity in this sector was particularly susceptible to some potential movers taking a step back.
Now, with mortgage rates more stable albeit still high, and greater buyer choice, many who had postponed their moving plans in this sector appear to be returning.
Rightmove anticipates the number of completed sales transactions this year to reach around 1.1 million. Rightmove’s key lead indicators, powered by the UK’s largest selection of properties for sale and real-time data, suggest positive progress towards reaching this number of transactions.
Still, the lengthy time to complete a sale after finding a buyer remains a challenge for both agents and movers. The average time between agreeing a sale and legal completion is a painful five months or 154 days. In total, it takes over 7 months on average from a seller coming to market to completing their move, meaning that as early as it may seem, would-be sellers hoping to celebrate Christmas in a new home need to be coming to the market about now.
The sluggish completion process in England is something that parliament is reviewing as part of its inquiry into improving the home buying and selling process. When compared with international markets, England’s average completion times are significantly slower, highlighting the substantial room for improvement.
The creation of a more seamless process, which includes providing more accurate information about a home earlier to potential buyers, and better connecting the parties involved in the transacting process through technology, are two areas of improvement that Rightmove suggests would be most beneficial to movers.
One strategy that Rightmove has identified as providing sellers with the edge to speed up a sale, is to work with an estate agent to price competitively from the outset of marketing and avoid the need to reduce the asking price after coming to market.
It takes on average 32 days for a sale to be agreed for a property that is priced right from the outset, less than a third of the 112 days that it takes if the home requires an asking price reduction before it has found a buyer.
Tim Bannister said: “We expect that the improved market activity levels and conditions this year will result in higher transaction numbers at the end of 2024 than last year. However, the extremely lengthy legal completion process is a frustrating barrier to home movers converting agreed sales into completed transactions more quickly.
"It may seem surreal to be thinking about Christmas in May, but we know that many would-be sellers picture celebrating the festivities in a new home, and to achieve that, now is the time to come to market.
"One strategy that is still giving some sellers the edge in this price-sensitive market, is working closely with an estate agent to price attractively right at the start of marketing, to give themselves the best chance of finding a buyer quickly.”
Nick Leeming, Chairman of Jackson-Stops said: “Seasonal demand and an uptick in listings has helped to boost spring transactions, although some may still be waiting in the wings for an elusive interest rate drop to ease affordability constraints. With inflation falling, there is hope the wait may come to an end soon as the Bank of England may look for an economic boost before the General Election.
"The message here is that lifestyle changes and supply are still the dominating market forces for most, anchoring house prices for the foreseeable future to provide much-needed stability and assurance. The more positive macroeconomic outlook in recent weeks has even led some to revise house price forecasts for the year upwards from decline to growth; consumer confidence that will likely trickle into a busy summer ahead.
"In particular, demand for detached homes and prime country properties are attracting the highest competition from buyers, as beauty spots come into their own, with the sun finally out and people aiming to move by the end of the year. Places like the Cotswolds, Essex and Hampshire have seen a remarkable uptick in buyer enquiries in the past six weeks, notably from families looking for top schools.”
Nathan Emerson, CEO of Propertymark comments: “Spring heading into summer is traditionally a busy time for the housing market and these latest figures may prove an ideal inspiration for sellers to use this as an opportunity to place their property on the market.
"Propertymark’s own Housing Insight Report demonstrates that there has been a recent 4 per cent increase in the number of potential buyers registered at each member branch, representing a strong appetite for buying and selling homes currently.
"Buyers and sellers are adapting to current inflation levels and higher interest rates, however, the more these two factors come downward, the more likely that there will be a further stimulation in housing market growth. With supply still being a central issue, with a general election on the horizon we hope all political parties focus on increasing the number of houses in the medium to long term.”
