- Average price of property coming to market rises by 1.7% to £366,189
House asking prices rose by almost £6,000 in the past month according to Rightmove, in the biggest new year bounce since 2020.
The asking prices of homes new to the market rose by 1.7 per cent on average or £5,992 in the month to 11 January, with the typical property now listed for £366,189.
However, asking prices are still nearly £9,000 below May 2024’s record, reflecting buyers’ squeezed budgets.
And price rises may begin to slow soon, as Rightmove said a record number of sellers had put their home on the market since Boxing Day.
The number of new properties coming to market is 11 per cent ahead of the same same period last year, meaning buyers will be spoilt for choice and sellers may need to adjust their asking prices to compete.
It also said the number of buyers contacting agents about putting their home up for sale since Boxing Day was 9 per cent ahead of last year, and the number of sales being agreed over the same period was up by 11 per cent
The glut of homes on the market is likely to stop sellers setting higher and higher asking prices this year, according to Colleen Babcock, property expert at Rightmove.
‘The record number of sellers we’re seeing is a double-edged sword. It’s encouraging to see so many sellers with the confidence to come to market, providing buyers with fresh choice,’ she said.
‘However, with lots of homes for buyers to consider, sellers will need to work even harder to stand out from the crowd and attract a buyer.
‘This could be with a tempting asking price, stand-out home features, immaculate presentation of the home, or a combination of all of these.
‘It’s vital that in a competitive market, sellers take on the recommendations of their agent, particularly when it comes to setting a realistic price.’
Mortgage rates tighten buyers’ budgets
Another reason why sellers will need to be restrained in setting asking prices too keenly is higher mortgage rates.
Mortgage rates aren’t expected to fall significantly for some time, and in the short term are more likely to rise.
This is because of uncertainty around the pace and number of future interest rate cuts by the Bank of England.
Yesterday, four major mortgage lenders announced they were increasing fixed mortgage rates across fixed products.
It means that unless things change, most buyers will continue securing mortgage rates of between 4.5 per cent 5 per cent this year.
On average, buyers are securing a 4.75 per cent rate on five-year fixes and 4.97 per cent on two year fixes, according to Rightmove.
On a £300,000 mortgage fixed for two years that means the average buyer will be paying £1,748 a month based on a 25 year repayment term.
‘Many buyers are still affordability-stretched, with high mortgage rates restricting borrowing power and limiting what they can afford to pay,’ added Babcock.
‘The market needs a boost for that momentum to be sustained, in the form of early and ongoing bank rate cuts, which should hopefully help to reduce mortgage rates.’
Jeremy Leaf, north London estate agent and a former Rics residential chairman, added: ‘There is one thing that is more highly prized than any other when it comes to buying a home – and that’s stability. Stability generates confidence to take on longer-term debt and move home.
‘Demand remains strong but worries persist, not so much about the likelihood of a reduction in interest rates but the pace of their decline, as well as Budget implications for the jobs market later this year.
‘As a result, some buyers are pressing the pause button, especially as there is so much more choice of property evidenced in these figures. Nevertheless, the underlying desire to move has not disappeared.’
