(Bloomberg) — Asking prices for UK homes rose at the highest annual pace in 12 months, driven by more top-of-the-ladder houses coming to market, according to the online sales portal Rightmove.
The average asking price of homes put up for sale rose 1.7% from a year ago to £372,324 ($462,890). Prices are now just £570 pounds short of the the record levels registered in May 2023.
Much of the boost is coming from large homes, which include four-bedroom detached houses and all five-bed properties. Rightmove said that corner of the market is seeing the strongest start to the year for price growth since 2014, with the number of new sellers up 18% from 12 months ago.
“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,” said Tim Bannister, director of property science at Rightmove.
After a year of subdued sales, renewed activity in the property market encouraging even more large-home owners to sell, creating a positive feedback loop. But people seeking to buy their first home are still struggling to afford soaring prices, leaving lower segments of the market less buoyant.
The highest interest rates in 16 years and a surge in inflation over the past two years has drained consumer finances. That could limit house price growth in 2024.
“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,” Bannister said.
Rightmove’s figures also don’t capture stagnation at the very top of the property market — where owners of mansions over £10 million are discounting to draw in buyers. Those deals mostly are arranged privately, often without advertisement.
High borrowing costs continue to weigh on less affluent buyers. Asking prices, typically an indicator of sellers’ confidence in the market, are growing at a slower place for sectors that rely more heavily on first-time or second-stepper buyers who remain price-sensitive, according to Rightmove.
However, the number of sales is now back to 2019 levels. That’s despite buyers facing much challenging conditions, with average 5-year mortgage rate at 4.84%, compared with 2.45% in April 2019.
The UK registered the higher number of sellers coming to the market in a day at the end of March so far in 2024. It was also the third-largest since 2020.
Prospective home buyers might pause their search come summer when they ditch house hunting for going on vacation, according to Bannister. Uncertainty around a potential general election in the second half of the year might also push down agreed sales.
“There appears to be a tempting window of opportunity for those who are considering a move to act now before these distractions arrive,” Bannister added.
More stories like this are available on bloomberg.com
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Published: 22 Apr 2024, 04:57 AM IST
