House prices fortified through increase in buyer demand

Rightmove reports an increased average in March of £368,118 for newly marketed properties, a rise of 1.5% since February of this year.

The market’s recovery is ongoing after a subdued 2023, marked by rising buyer demand and an above-average boost in new property listings for March. Rightmove has noted a rise in buyer interest, evidenced by increased enquiries to estate agents and stronger sales compared to a year ago. Coupled with the usual optimism of spring, this trend has driven prices upwards. March’s price growth of 1.5% surpasses the typical March increase of 1.0% and marks the largest monthly rise in prices in 10 months.

However, average asking prices remain £4,776 below their peak in May 2023. Rather than signalling the beginning of another market surge, indications suggest that overall activity levels have reverted to more stable pre-pandemic patterns. However, the higher mortgage interest rates of today mean that increased activity is from buyers who have more resilience to higher mortgage costs.

Buyer and seller activity

March typically sees robust growth in asking prices, as both buyer and seller activity increases with the onset of the spring selling season. However, the unusually strong price growth this March suggests that new sellers are notably more confident, and are perhaps too optimistic in their perception of buyer activity and affordability in their local market. Despite above-average price increases in the first three months of this year, asking prices remain below their highest in May 2023 of £4,776. This presents a timely opportunity for those buyers who are interested but yet to act, as it appears we have passed the market’s low point. While some sellers remain overly optimistic about pricing, others recognise the need to be flexible and realistic, especially given higher interest rates that can strain affordability for many buyers.

Sales by property type and location

Since March began, agreed sales have increased by 13% compared to last year, suggesting a potential rise in total transactions for the year set to surpass the one million mark in 2023. The prime properties sector, less sensitive to mortgage rates, leads this growth with an 18% increase in agreed sales. The largest homes sector is also driving increased engagement with estate agents compared to last year. Buyer demand for prime properties is up by 12% compared to the same period last year, outpacing the 8% increase for all property types.

London has experienced the most significant rise in buyer demand for both prime and all properties when compared to one year ago. Driving factors of renewed interest in the capital include returning to the office, salary increases, stable house prices and slowing inflation.

Effects of the Budget

Although this year has had a stronger start than expected, the housing market is still vulnerable to external factors such as the Budget announcement on 6 March 2024. With zero mention of support for first-time buyers or mortgage rates, Rightmove’s real-time data indicates a swift break-off in buyer interest.

Property time on market

Currently, properties stay on the market for an average of 71 days, the longest since 2019 at this time of year. Buyers are quick to purchase competitively priced properties while those less attractively priced remain on the market for longer. At the same time, the average 5-year mortgage rate has increased to 4.84% compared to 4.64% from five weeks ago, again drawing in more resilient buyers.

Following three years of a challenging economic climate we are finally witnessing a stronger housing market. With interest rates stabilising this year, now is the prime time to either buy or sell.

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