Average house prices hit record high as new sellers capitalise on improving market, Rightmove HPI data shows

Average house prices hit record high as new sellers capitalise on improving market, Rightmove HPI data shows

Here's what you need to know about house prices if you're thinking of buying or selling in 2023 

House prices have reached a new average record price high of £372,894, according to the latest research by Rightmove. 

The research shows that the average price of properties entering the market has surged by 1.8% in the last month, equivalent to a £6,647 increase. 

This monthly increase marks the largest rise experienced throughout the entire year thus far, surpassing the historical average May increase of 1.0%.  

As the market continues to stabilise and demonstrate signs of recovery, industry experts remain cautiously optimistic about the future trajectory of the property market. 
 

Property market surges to new record highs 

Rightmove reports a remarkable surge in property prices, setting a new average record of £372,894 in the property market. This surge is believed to be a delayed reaction to the exceptionally high level of market activity that has been observed since the beginning of the year. 

Moreover, current agreed sales numbers are trailing only 3% behind the figures recorded in the more conventional pre-pandemic market of 2019. This statistic suggests that market conditions are gradually returning to a more normal state. 

In addition to this, the final asking price to the agreed sale price has stabilised at an average of 3.1%. This figure shows less fluctuation with the final asking price to previous levels indicating the confidence of home movers in the market's future prospects. This stability further bolsters the positive outlook for the property market, instilling greater assurance among buyers and sellers alike. 

Will house prices rise or fall in 2023? 

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While increased price confidence seems warranted in the lower and middle market segments, there are some indications of excessive optimism in the top-tier luxury property sector, according to Rightmove.  

It appears that certain discretionary buyers (potential buyers who have the luxury of choice) are exercising caution and refraining from making immediate purchasing decisions.  

This is evidenced by a 1% decrease in buyer demand for top-of-the-ladder properties compared to 2019 levels. In contrast, the second-stepper sector demonstrates a robust demand, surpassing 2019 levels by 3%. 

Additionally, the first-time-buyer sector has experienced a surge, with demand soaring 6% higher than in 2019 which has also been attributed to the rise in average price. 

Despite a recent increase in the Bank of England base rate, average mortgage rates have remained stable. Notably, the average 5-year fixed mortgage, requiring a 15% deposit, currently stands at 4.56%. 

This is lower than the 5.89% rate recorded last October by Rightmove. The steady mortgage rates offer further encouragement to potential buyers, facilitating affordable borrowing in the face of market price fluctuations. 

This data suggests that the current state of the property market highlights the resilience and adaptability of both sellers and buyers. The record-high prices, coupled with a resurgence in market activity, underscore the enduring strength of the real estate sector. 

As the market continues to stabilise and demonstrate signs of recovery, industry experts remain cautiously optimistic about the future trajectory of the property market. 
 

What does this mean for those wanting to sell? 

The number of potential buyers reaching out to agents regarding homes for sale has increased by 3% compared to the same period in 2019, which was a more typical market environment, according to Rightmove.  

This growth in buyer inquiries is predominantly driven by the first-time buyer and second-stepper sectors, with demand in these segments surpassing pre-pandemic levels by 6% and 3% respectively.  

However, there are indications of over-optimism in the top-of-the-ladder sector, where prices have been rising the fastest this month, despite a 1% lower buyer demand compared to pre-pandemic levels. 

The record-breaking prices witnessed this month strongly indicate sellers' confidence in the market, according to Tim Bannister, Rightmove's Director of Property Science.  

He suggests this confidence is substantiated by the activity levels and the limited availability of properties for sale, particularly in certain segments of the market. At the top end, sellers with more discretion may be inclined to set higher prices and wait for the right buyer.  

However, he also states "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". 

I’m buying/selling a house, what do I need to know? 

Rightmove's data show that although properties in the largest-homes sector are still selling at a faster pace than in 2019, the average time it takes to secure a sale has increased significantly. Currently, it takes an average of 67 days to agree on a sale in this sector, nearly double the 35-day average at the same time last year. 

This increase in time taken to find a buyer is most pronounced in the second-stepper properties, which now require an average of 52 days compared to 28 days last year, and first-time buyer properties, which now take 53 days, up from 35 days a year ago. 

Mortgage rates have remained relatively stable week-to-week despite a recent increase in the Bank of England's base rate. This stability, according to Tim Bannister allows home movers to have a clearer understanding and plan for their expected mortgage costs more effectively. 

For buyers, the stamp duty cut announced within the mini-budget in September 2022 means that the threshold for stamp duty exemption in England and Northern Ireland has been lifted from £125,000 to £250,000. 

For first-time buyers, who previously paid no stamp duty on the first £300,000, that figure has gone to £425,000. 

Source Homebuilding.co.uk