However, the 0.3% monthly rise also reveals that the pace of growth is starting to slow, with affordability constraints, a better balance between supply and demand, and usual seasonal price drops all contributing to an easing of pace.
Despite five consecutive interest rate rises and the increasing cost of living, buyer demand for each available property remains very strong, being more than double (+113%) the pre-pandemic five-year May average. However, we are seeing signs that this is continuing to ease, with this measure down by 8% in May compared to April. After a very strong first half of the year, it is likely that affordability constraints will have a greater influence on market behaviour in the months ahead, with further interest rate rises anticipated.
This, alongside more choices coming onto the market for buyers and the usual seasonal variations we’d expect, means that there are likely to be some month-on-month price falls during the second half of the year. We expect this to bring house price growth by the end of the year to around the 5% we originally predicted in December.
Tim Bannister, Rightmove’s Director of Property Science, comments: “The exceptional pace of the market is easing a little, as demand gradually softens and price rises begin to slow, which is very much to be expected given the many record-breaking numbers over the past two years. When we look at the number of buyers contacting estate agents compared to 2019 or the pre-pandemic five-year average, demand is still very high compared to what was once considered normal.
"We’re hearing from agents that though they might have had slightly fewer enquirers for each property in recent months, they’re still seeing significant interest from multiple buyers and are achieving successful sales. Entering the second half of the year, we anticipate some further slowdown in the pace of price rises, particularly given the worsening affordability challenges that people are facing. We expect this to bring the annual rate of price growth down from the current 9.7% towards the 5% increase that Rightmove predicted at the beginning of the year.”
Buyers are currently being welcomed with more fresh choices, with the number of properties coming onto the market up by 7% compared to this time last year. However, this measure remains down by 11% when compared to the same time in 2019.
A conveyancing log-jam means that those who are looking to move this year and have yet to act will need to do so in the coming weeks. It is currently taking 150 days to complete a purchase on average after agreeing on a sale, 50 days longer than at this time in 2019. This means that those who are hoping to complete a deal in time to enjoy next Christmas in a new home, need to come to market in the next few weeks to give themselves the best chance of finding a buyer and completing the transaction by the end of the year. There are more than 500,000 homes that are currently sold subject to contract, a massive figure which is 44% higher than it was at this time in 2019, and 39% higher than the pre-pandemic five-year average.
Tim Bannister concludes: “Existing homeowners looking to buy again will still need to put themselves in the best possible position to secure their next home in this strong market by making sure they find a buyer for their current property before looking for their next home. This is all the more important for those hoping to complete the process as quickly as possible and enjoy Christmas in a new home this year. Though December may feel far away, the data shows the current conveyancing log jam means it is taking an average of 50 days longer to complete a purchase after agreeing on a sale than it did in 2019. It’s therefore important to act now and get in touch with a local estate agent to give yourself the best possible chance of being in your new home for Christmas.”
