According to data released on Monday, UK home prices reached a new record high in May as the housing industry continued to defy gloomy predictions at the beginning of the year.
Rightmove’s house price index revealed that when sellers responded by increasing their pricing confidence, the average price of property coming to market grew by 1.8%, or £6,647, to establish a new high of £372,894.
According to Rightmove, the 1.8% monthly gain is the largest of the year so far and substantially more than the 1.0% May increase that has historically been seen.
One explanation for this increased optimism, according to Tim Bannister, director of property science at Rightmove, “may be that the gloomy start-of-the-year predictions for the market are looking increasingly unlikely.”
‘Bannister said, “What is much more likely is that the market will continue to transition to a more normal activity level this year following the exceptional activity of the pandemic years”.
“There are likely to be more twists and turns to come,” the author writes, “but steadily declining mortgage rates and a generally more optimistic outlook for the economy are also contributing to more seller confidence.”
Rightmove reported that the gap between final asking price and agreed sale price has stabilized at an average of 3.1%, in line with normal market levels, and that agreed sales numbers are currently only 3% behind the last more normal pre-pandemic market of 2019. According to Rightmove, it shows how confident homebuyers are in the market’s prospects.
While there are symptoms of over-optimism in the more priced properties as some discretionary purchasers hold off, greater price confidence does seem more justified in the lower and middle market sectors.
According to the survey, buyer demand is 1% lower than in 2019 for top-of-the-ladder residences, 3% higher than in 2019 for second-stepper properties, and 6% higher than in 2019 for first-time buyers.
Although the 67-day average is still quicker than in 2019, properties at the top of the market are taking twice as long to sell than they did a year ago.
A stabilizing of typical fixed-rate mortgages is another factor boosting home buyers’ confidence. According to Rightmove, the average rate for a mortgage with a five-year fixed term and a 15% deposit is presently 4.56%, down from 5.89% in October.
Rightmove’s Bannister said, “A more stable mortgage market is good news, and after a period of rapid rate rises followed by some significant falls this year, this period of relative stability will help home-movers to plan ahead.”