UK property prices have reached a new record high with the average asking price climbing to £375,131 in May up 0.8 per cent (+£2,807) from April. This surge is largely driven by a significant uptick in demand, with a particular type of property leading the charge.
Despite ongoing concerns about high mortgage rates, which have remained elevated since the Bank of England’s base rate increase to 5.25 per cent last August, the momentum from the spring selling season has been robust with Rightmove’s latest data revealing that the number of sales agreed in the first four months of 2024 is up by 17 per cent compared to the same period last year, outpacing the 12 per cent increase in new listings thereby causing a shortfall between demand and supply.
Rightmove’s researchers believe this pent-up demand is primarily being driven by would-be buyers who paused their plans last year.
The top-of-the-ladder sector leads the charge
The top-of-the-ladder sector, which includes larger homes with four or more bedrooms, has been at the forefront of this price growth. In May, properties in this category saw a monthly increase of 1.6 per cent, bringing the average asking price to £693,791. Annual growth in this sector stands at 1.3 per cent, underscoring its strong performance.
Despite larger properties primarily driving the asking price increases, second-stepper properties have also seen an increase of 0.2 per cent on the previous month while first-time-buyer prices have risen by 0.4 per cent.
Market challenges
Despite the positive indicators, the lengthy process from sale agreement to legal completion remains a significant challenge with data suggesting on average, it takes 154 days to complete a sale after a buyer is found, contributing to an overall timeline of over seven months from listing to completion. The data also highlights the importance of getting the initial listing pricing right, with it taking an average of 32 days for well-priced properties to have a sale agreed versus 112 days if the property is reduced.
Regional highlights and future outlook
Regionally, the North East has shown the strongest annual price growth of 5.8 per cent (by £190.15), benefitting from its relatively lower average prices, while in monetary terms London prices have increased the most growing by £697.19. Lifestyle choices are also driving demand in areas like the Cotswolds, Essex and Hampshire, particularly for detached houses and prime country properties.
While the market’s resilience is evident, many are still waiting for mortgage rates to fall before diving in. There are also calls for the entire home buying and selling process to be digitised to speed up the process.
Despite this caution, the positive macroeconomic outlook has prompted revised forecasts, with predictions shifting from declines to growth in asking prices.
Tim Bannister, Director of Property Science at Rightmove, which conducted the research, commented: “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 per cent, where it has remained since August 2023. However, the momentum of the spring selling season has exerted enough upwards price pressure to reach a new record asking price. However, it’s important to remember that prices overall are still only 0.6 per cent 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.”
As the property market continues to evolve, it remains to be seen how these factors will shape the remainder of 2024. For now, the combination of pent-up demand and strategic pricing is driving the market to new heights.
