0.9% Increase In Asking Price In First Few Weeks Of 2023

0.9% Increase In Asking Price In First Few Weeks Of 2023
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17 January 2023 – The housing market has started the new year strongly, with a 0.9% increase in asking price this month.

According to new data from property portal Rightmove, buyer demand has increased in the first few weeks this month. Agents have reported a 4% growth in buyer enquiries compared to the same period in 2019.

Compared to the two weeks before Christmas, which saw a lull, demand is up by 55%. This is the biggest jump in demand at the start of the new year since 2016.

However, demand is down by a third compared to the same period last year, when the market was red-hot.

Although it’s still early days, the property portal is cautiously optimistic that this increased activity on the property market will continue.

Surge In Demand Has Pushed Up Prices

Rightmove’s data also shows that the increased demand has pushed up the average asking price by 0.9% in January. This is the biggest increase since January 2020.

But the average asking price is still below what it was in October 2022, when it was its highest.

This is a clear sign, according to the property portal, that buyers are confident about the housing market in the year ahead.

Sellers also show confidence in the market, with the number of requests for house valuations rising sharply in the first week of the new year.

5 January 2023 was the third busiest day ever for seller activity, so Rightmove.

Despite the flurry of activity, the property portal suggests that sellers should price their properties realistically if they want to sell their home successfully.

Stock levels are expected to build up over the next few weeks and months, which means buyers will have more choice. This means an over-valued property will look less attractive and will be more difficult to sell.

Because of the sharp increase in asking price during the pandemic, sellers are likely to still make a good profit, even if they price their home more realistically.

First-Time Buyers Struggle To Get On Property Ladder

Even though mortgage rates have started to come down, with deals below 5% now available, they are still considerably higher than two years ago.

According to Nationwide, affordability for first-time buyer homes is lower than it has been 15 years ago. Mortgage payments now take up 39% of the net salary for first-time buyers.

This is assuming they have a 20% deposit and get a mortgage rate of 5.5%.

This means that many potential buyers have to scale down their wish list or postpone their plans to get on the housing ladder.

While it is widely expected that house prices will fall this year, many first time buyers will struggle to save up for a 20% deposit. The recent surge in house prices and the cost-of-living crisis will make it impossible for some to raise the funds needed.

Between the start of the pandemic and the end of 2022, house prices increased by 19 per cent, while incomes rose by a much more modest 9 per cent. This in turn means that a 20% deposit on a typical first-time buyer home is now equivalent to 112% of the pre-tax income of a typical full-time employee, a similar level to a year ago, and only modestly below the all-time high of 117 per cent recorded earlier in 2022.

Andrew Harvey, Senior Economist at Nationwide

It was reported that during the pandemic, UK households saved an additional £200bn. But the majority of these savings were made by older, more affluent savers. This meant that first-time buyers had to rely on help from friends and family.

New data suggests that a third of first-time buyers needed help to raise the deposit for their first house in 2021/22. In the mid-1990s, only 27% needed a helping hand.

Call For More Help For First-Time Buyers

East Midland-based conveyancing firm Bird & Co has called on the Government to do more to help first-time buyers to get on the housing ladder.

The firm said their internal data shows that fewer first-time buyers bought a home last year, while sales for business purposes have increased.

Bird & Co’s data suggests that 68% of its clients in 2022 were first-time buyers. This is a drop by 3% compared to 2021, when 71% were first-time buyers.

75% of their clients bought a property as a main residence, up from 42% in 2021. The number of people buying properties as holiday lets, houses of multiple occupancy (HMO) and lettings went down.

At the same time, the number of people buying for business purposes has risen sharply to 33% in 2022, up from 15% in 2021.

The increase in investment for business purposes could serve some purpose to communities, either by creating commercial spaces for work or by providing more available properties to let. That said, more needs to be done by the government to support first-timers in the coming years, or things may continue to stagnate.

Daniel Chard, Managing Partner at Bird & Co

The solicitors firm also said that their data shows that the current government schemes for first-time buyers did not have a fundamental effect.


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