Property prices hit a record high in May, according to Rightmove, with the UK property market showing promising signs of stability. The average asking price of a property coming onto the market rose by 1.8% (+£6,647) this month, compared to 0.2% in April. As a result, the UK average asking price has reached an all-time high of £372,894.
Asking prices for UK properties also grew by 1.5% in the year to May.
May’s monthly price increase is the largest recorded by Rightmove this year. The online property portal considers it a delayed response to the higher-than-expected level of market activity recorded so far in 2023.
Average increases in May tend to hover around 1%, so this month’s price rise has defied expectations and injected some long-awaited optimism into the UK market.
Tim Bannister, Rightmove’s director of property science, said:
This month’s strong jump in new seller asking prices looks like a belated reaction and a sign of increasing confidence from sellers.
With gloomy predictions looking increasingly unlikely, things appear to be looking up for the property market. The UK’s economic outlook has improved sharply, with experts now saying that the country will escape a recession, and the sterling is performing strongly.
Mortgage rates are also steadying, despite the Bank of England’s 12th interest rate hike at the start of May. Average five-year fixed rate mortgage deals (for buyers with a 15% deposit or equity) are 4.56%, according to Rightmove, compared to 5.89% last October.
With this, buyer confidence is increasing—particularly amongst those reliant on financing—and first-time buyers are returning to the market.
First-Time Buyer Demand Up 6%
Overall, buyer demand is 3% higher than in 2019, with the number of sales agreed just 3% behind pre-pandemic levels. The number of first-time buyers searching for properties has jumped 6% above pre-pandemic levels, whilst second-stepper demand has increased a more modest 3% since 2019.
At the top end of the market, however, there are some signs of over-optimism. Whilst the larger homes sector experienced the fastest-rising prices in May, buyer demand remains 1% lower than pre-pandemic levels.
Properties are taking longer to sell than this time last year, with larger homes taking the longest—67 days, compared to 35 days previously.
Second-steppers are taking 52 days, up from 28 days last year, whilst first-time buyer properties are remaining on the market for 53 days, up from 35 days.
Sellers of more expensive homes are more likely to list their properties at a higher price and wait for the right buyer to come along. However, realistically priced properties are selling the best.
The data suggests that some sellers in the larger homes sector will need to price more comparatively if they want to find a buyer in the current market.
Furthermore, the average discount from the final asking price to the agreed sale price has steadied at an average of 3.1%, in line with pre-pandemic market levels.
Activity levels are expected to continue stabilising this year, reaching a more normal level after two years of inflated activity driven by the pandemic. And with a positive increase in property prices recorded by Rightmove, the UK housing market is proving resilient, stirring up new confidence among both buyers and sellers.
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