21 March 2023 – The property market shows signs of picking up momentum as 6% more buyers have been registered compared to the same time in 2019 before the pandemic hit.
According to the latest House Price Index by Rightmove, the housing market seems to continue its cautious recovery.
With the busy spring season ahead, confidence and stability are what the market needs to get back to normal after the turbulent past two years.
Buyer demand is up by 6% compared to the same period in 2019. This increased buyer activity had an impact on house prices.
House Prices Rise By 0.8% In March
Rightmoves data shows that after property prices have not moved in February, they have increased slightly by 0.8% in March. This means that the average house in the UK now costs £365,357.
While this is still below the 1% average monthly rise that we have seen in March for the past 20 years, it’s a sign that the property market is slowly returning to normal.
The annual house price growth currently stands at 3%, down from 3.9% in February.
The main contributor to this rise in house prices this month is the big increase in the asking price for top-of-the-ladder properties of 1.2%. In contrast, first-time buyers homes have only gone up by 0.5% and the price for second-stepper homes has risen by 0.4%.
The number of sales agreed in the last two weeks is highest in the first-time buyer sector, with only 4% below the pre-pandemic levels in March 2019. Compared to the same time last year, sales agreed are 18% behind, showing how exceptional last year was for the housing market.
In comparison, sales agreed in the top-of-the-ladder and second-stepper sectors are lagging behind, with 10% below 2019 levels for the most expensive houses and 13% for the middle range homes.
Given the low number of sales agreed in the last two weeks for top-of-the-ladder properties, the jump of 1.2% in asking price in this sector seems surprising. Rightmove suggested that these sellers are over-optimistic and need to moderate their price expectations.
Lagging sales agreed in the larger homes sectors are likely to be caused by a combination of factors including fewer pandemic-driven moves to bigger homes, a more cautious approach to trading up due to the cost of living, and even perhaps concern over the running costs of a larger home.
Tim Bannister, Director of Property Science at Rightmove
While buyer demand is up, supply is still trailing behind and has only risen slightly in February. According to Righmove data the average stock per agent is currently at 43 properties, which includes properties under offer and sold STC.
This is only 1 property more than in January and the same number as in December 2022. The time it takes to secure a buyer has fallen in February to 57 days, compared to 62 days in January.
This suggests that prices are likely to keep rising as demand outstrips supply.
Mortgage Rates Continue To Fall
While mortgage rates are still higher than this time last year, they are continuing to fall. The average rate of a 15% deposit five-year fixed mortgage is now 4.65%, down from 4.75% last month and from 5.89% in October last year at its peak.
This is still much higher than the 2.48% in March last year, however. In view of this, the property portal believes that many first-time buyers are getting support from family to be able to get on the property ladder.
In the form of financial support but also by first-time buyers moving back in with their parents to avoid paying high rents and save up for a deposit.
The Office for Budget Responsibility (OBR) has released its latest forecast to accompany the spring budget, and the news is good for the housing market. The OBR predicts that inflation is likely to reduce quicker to 2.9% than thought previously.
This could lead to the Bank of England rising interest rates less sharply than in previous months and will be willing to lower them more quickly. If this does come to pass, the mortgage rates are likely to fall further.
However, it is not anticipated that they will reach the lows that we have seen in the years before the pandemic.
Property Market Mostly Ignored In Spring Budget
On 15 March, the Chancellor has delivered his first spring budget. And although the property industry had a big wishlist, Jeremy Hunt mostly ignored the housing sector.
Even though the budget aimed at economic growth it is surprising that the housing market did not feature at all. This has been a great disappointment for the industry.
Another opportunity for housing reform has sailed on by. An innovative Chancellor would have used his time at the dispatch box to set out reforms that place as much emphasis on later living as first-time buyers.
Nick Sanderson, CEO at Audley Group
