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Despite the dual economic pressures of high and sustained inflation and 12 consecutive Bank of England base rate hikes, the capital saw a 2.8% monthly rise in prices, according to new data released by right movement.
This puts the average asking price in London at £696,500, a staggering amount for most applicants. buyers.
On an annual basis, the price increase was more moderate, at 1.1 percent, but the figures suggest that market activity is much higher than expected, with properties taking an average of 63 days to sell.
Commentators believe the traditional spring boost in the housing market has been delayed this year as buyers slowly return and confidence builds after a tumultuous nine months following the mini-Budget fallout.
“This month’s sharp jump in new seller asking prices seems like a late reaction and a sign of increased seller confidence as we typically see such a large monthly increase early in the spring season,” Tim said. Rightmove Bannister.
“One reason for this surge in confidence may be that the gloomy early-year predictions for the market are looking increasingly unlikely. What is much more likely is that the market will continue to transition to a more normal level of activity this year after the exceptional activity of the pandemic years.
“Stable mortgage rates and a generally more positive outlook for the economy are also contributing to increased seller confidence, although more twists and turns are likely to come.”
The Rising and Falling Boroughs of London
Within London, Hackney was the borough with the biggest annual increase in property prices, rising 5.3 per cent to an average of £724,200.
It was followed by Southwark, up 4.3 per cent to £673,400, and Camden, with an average property price of £1,040,600, an annual increase of 3.7 per cent.
The biggest ‘fallers’ in London were Merton, where house prices fell 2.5 percent to £718,200, Hillingdon down -2.2 percent to £541,200 and the capital’s most expensive district Kensington and Chelsea where prices fell 2.2 percent. cent to £1,660,210.
“The market is still starved for inventory and good quality homes in popular areas are still finding buyers quickly. The change in the market this year makes home valuation more challenging, as similar properties can value slightly differently depending on how popular that particular roadway or particular type of property is with buyers,” said Lars Gooch, of Keatons in London.
“Most of the activity we’re currently experiencing is with homeowners coming to the market for relocation reasons, perhaps trading in their first apartment for something bigger or moving locations to free up some of the equity they have in their current home.”
More confidence among first-time buyers and second-step buyers
The picture for the UK as a whole is similar to London with a monthly increase of 1.8% in May, compared to an average increase for May of 1%, and annual price growth of 1.5%. However, demand is more nuanced and differs across the entire price spectrum.
Domestic buyer demand was three percent above 2019 levels for second-step properties and six percent for first-time buyer homes. By contrast, it was one percent lower than it was in 2019 for prime-tier homes, suggesting these buyers are being left behind.
This means agreed sales are just three percent below 2019, the last normal pre-pandemic market, and the discount from the final sales price to the agreed sales price is 3.1 percent, again It reflects that confidence has returned to the market and that sellers are being more realistic with their prices.
Despite the base rate increases, mortgages are holding steady and an average five-year fixed 15 percent deposit mortgage is now 4.56 percent, up from 5.89 percent last October .
“This month’s record price is a strong indication of seller confidence, and we can see from activity levels and the still relatively limited selection of properties for sale that this confidence is warranted in some segments of the market,” he said. Bannister.
“More discretionary sellers at the higher end may be prepared to price high and wait for the right buyer, and while it is welcome that they appear to feel no financial pressure to sell, the data suggests that some sellers in this sector will need more competitive pricing.”
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