"Agents report that the market remains very price-sensitive, and despite the current optimism, these are not the conditions to support substantial price growth."
- Tim Bannister, Rightmove’s director of property
The average price of property coming to market has risen by 1.1% this month to £372,324, just £570 short of May 2023’s record of £372,894, while the annual rate of growth has increased to 1.7%, the highest level for 12 months, according to the latest Rightmove data.
A key driving factor behind this growth is the largest homes sector, which is seeing its strongest start to a year for price growth since 2014.
Overall, Rightmove says it continues to be a "much-improved" first four months of the year compared to 2023, with the market seeing boosts in both buyer and seller activity this Spring.
However, agents report that despite the rise in prices and general sense of greater optimism, high mortgage rates are continuing to stretch affordability for the typical buyer. The market remains very price-sensitive and operates at different speeds across its many segments and areas, with prices and sales activity rising more slowly in the more mortgage-dependent, mass-market first-time buyer and second-stepper sectors.
The number of new sellers coming to the market is up by 12% compared to this time a year ago, while the number of sales being agreed is up by 13%, as the market rebounds from a much more subdued Spring last year. Much of this activity is occurring in the top-of-the-ladder sector, which covers four bed detached houses and all five-bed properties and higher, with the number of new sellers in this sector up by 18% compared to this time last year, and the number of sales agreed up by 20%. Agents report that the increased choice in this sector, after many months of very limited supply, is encouraging previously reticent home-owners to come to market, creating a cycle of more new listings leading to more sales activity.
By contrast, the number of new sellers in the first-time buyer and second-stepper sectors is up by 10%, while the number of sales agreed is up by a more modest 9% and 13% respectively compared with last year.
Overall, the number of sales being agreed is now level with 2019 despite buyer conditions being much more challenging, with the average five-year mortgage rate now at 4.84%, compared with 2.45% in April 2019, while average property prices are 22% higher. However, affordability has been assisted by average wage growth of 27% over this time-period, slightly ahead of house price growth.
Emphasising this year’s boost in Spring buyer and seller activity, Thursday 28th March saw the highest number of new sellers coming to the market in one day so far in 2024, and the third largest since August 2020 - only pipped by Boxing Day 2022 and 2023 - with many sellers keen to capture buyer attention over the Easter weekend.
Tim Bannister, Rightmove’s director of property, said: “The top-of-the-ladder sector continues to drive pricing activity at the start of the year, with movers in this sector typically less sensitive to higher mortgage rates, and more equity rich, contributing to their ability to move. While some buyers, across all sectors, will feel that their affordability has improved compared to last year due to wage growth and stable house prices, others will be more impacted by cost-of-living challenges and stickier than expected high mortgage rates. Despite these factors, it has been a positive start to the year in comparison to the more muted start to 2023. However, agents report that the market remains very price-sensitive, and despite the current optimism, these are not the conditions to support substantial price growth. Sellers who are keen to secure their sale will still need to price realistically for their local market and avoid being overambitious at the start of marketing to give themselves the best chance of finding a buyer.
“The summer holidays are typically a time of distraction for some home-hunters, as they temporarily pause their search and head abroad or to the British seaside. In addition, the Euro 2024 football tournament and the Olympics this summer, likely followed by a General Election during the second half of the year, will add more buyer distractions than usual. There appears to be a tempting window of opportunity for those who are considering a move to act now before these distractions arrive. While affordability is still very tight, property and mortgage market conditions remain stable, buyer choice is good, and many sellers will recognise that it is the right time to negotiate on price to agree a deal. The boost in activity suggests that many home movers are already springing into action to make their move.”
