Better than expected market surprises many as buyers return
UK Home Buyers Return
The average price of property coming to the market rises by just £14 this month to £362,452 says Rightmove’s latest index. This is the smallest increase from January to February on record, though prices remaining flat rather than falling as some expected could be seen as a positive indicator for the year ahead. However, reflecting the slower market conditions new sellers have broken with tradition and held prices static for the first time ever at this time of year rather than increase them.
Transitions from a fast to a slower-paced market have historically had many different paths, and whilst it’s early days the combination of sellers being more realistic on price and an improving picture on the number of sales being agreed suggests a softer landing for the market than many expected.
Though it is still very early in the year, this month’s key metrics suggest that many buyers are seeing reasons to get on with their moves and have the confidence to return to a market which, so far, is stronger than many expected. The number of potential buyers contacting agents is up by 11% in the last two weeks compared with the same period in 2019.
Tim Bannister, Rightmove’s Director of Property Science says: “This month’s flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint. In addition to market conditions demanding greater realism on price, we are transitioning into a slower paced market, where buyers will take longer to find the right property at the right price due to the higher cost of servicing a mortgage. There are other indicators that this will be a softer rather than a hard transition despite the turbulence at the end of 2022.”
Perhaps even more surprisingly, it is sales in the first-time buyer sector which are holding up most strongly and are down only 7% on 2019. Those who are in the market and able to move are motivated to agree a purchase, likely driven in part by high and increasing rents, and a continued desire to own their own home. Conversely and an indication of hyper-local and sector differences, sales in the top-of-the-ladder sector are down by 16% in the first two weeks of February compared with the same time in 2019.
Mortgage Rates 2023
Meanwhile average mortgage rates have edged downwards after the turbulent months immediately following the mini-budget. The latest data shows that someone looking to take out a five-year fixed mortgage with a 15% deposit would now be looking at an average rate of 4.82%, compared with 5.90% in October.
While there is still an overall shortage of property for sale, with available properties to buy down by 24% compared to 2019, more choice is giving prospective movers confidence that they will be able to find the right home for them. The number of available homes for sale is up by 48% on the record low levels of last year, and this slower-paced, greater-choice market appears to be suiting the mass of buyers who need to organise a mortgage and who often lost out to cash buyers in the frenzied best bid scenarios of recent years.
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