The UK property market has experienced a modest upturn, with the average price of properties coming to market reaching a new record of £375,131 – reflecting the momentum of the Spring selling season.
May has set new price records in 12 of the past 22 years. Despite this growth, the market remains highly price-sensitive, with average asking prices only 0.6% higher than a year ago.
The top-of-the-ladder sector, encompassing larger homes such as four-bedroom detached and five-bedroom plus properties, continues to lead the price growth. Average prices in this segment have risen by 1.3% compared to last year. This trend is driven by pent-up demand from would-be buyers who paused their plans last year, despite mortgage rates remaining elevated for longer than anticipated. Tim Bannister, Rightmove’s Director of Property Science, said:
“We expect that the improved market activity levels and conditions this year will result in higher transaction numbers at the end of 2024 than last year. However, the extremely lengthy legal completion process is a frustrating barrier to home-movers converting agreed sales into completed transactions more quickly. It may seem surreal to be thinking about Christmas in May, but we know that many would-be sellers picture celebrating the festivities in a new home, and to achieve that, now is the time to be coming to market. One strategy that is still giving some sellers the edge in this price-sensitive market, is working closely with an estate agent to price attractively right at the start of marketing, to give themselves the best chance of finding a buyer quickly.”
In the first four months of this year, the number of sales agreed is 17% higher than the same period in 2023, surpassing the 12% increase in the number of new sellers coming to market. The surge in activity is most notable in the top-of-the-ladder sector, which saw a shortage of available homes during the pandemic and a volatile post-mini-Budget period. Now, with more stable yet still high mortgage rates and increased buyer choice, many who had postponed their plans are returning to the market.
Rightmove anticipates around 1.1 million completed sales transactions this year, supported by their data from the UK’s largest selection of properties for sale. However, the lengthy average time of 154 days between agreeing a sale and legal completion remains a significant challenge. Including the average 62 days needed to find a buyer, the total process takes over seven months, meaning prospective sellers aiming to move by Christmas should start the process now. Dan Salmons, CEO at property technology company Coadjute, said:
“Whilst long completion times have been a fact of life for years, it remains painful for home-movers, and we see it as something technology can and will solve. At the heart of it, the delays are caused by problems of communication, and the difficulty in rapidly obtaining accurate data in a secure way. There’s certainly a lot of progress that can be made, and whilst there’s no silver bullet, we hope to eventually see some dramatic improvements in the current time to complete.”
Parliament is reviewing England’s “sluggish completion process” as part of an inquiry into improving the home buying and selling experience. Comparatively, England’s completion times are slower than international markets, indicating substantial room for improvement. Rightmove suggests that providing more accurate home information earlier to potential buyers and better connecting parties involved in the transaction through technology could significantly benefit movers.
One effective strategy identified by Rightmove’s data is pricing a property competitively from the outset. Properties priced correctly from the start take an average of 32 days to agree a sale, compared to 112 days for those requiring an asking price reduction.
Contrary to some predictions of a market bounce, experts remain cautious. While Rightmove and other commentators have reported strong buyer demand and increased sales, with April seeing a 1.5% rise in newly marketed property prices, experts advise tempering expectations. Nationwide’s price index showed a 1.6% year-on-year increase in March, and Halifax reported a 0.3% annual growth. However, some experts argue that the only real winners in the current market are cash buyers, given the ongoing high mortgage rates. Commenting on the current market, Jonathan Rolande, founder of House Buy Fast, said:
“To describe the current situation as ‘positive’ is a little optimistic. It also misses a key-point. The figures the market is celebrating come from a very low ebb. A year ago the market was still recovering the botched Budget of Kwasi Kwarteng which shook the property sector to its foundations.
We’ve moved on from there but we could be in danger of thinking things are better than they are.
Nearly halfway into 2024, it is beginning to look like the year will mostly be one of consolidation and stabilisation. The inflation rate is falling and wages are rising. This is good news. But very few people feel better off than they did two or three years ago and we look unlikely to reverse that feeling any time soon.”
Pinpointing who the current winners are he said that right now the market is being “buoyed up by cash purchasers” who “currently account for over 30% of sales”. He added:
“It was more like 20% until 2022. So cash-buyers are king right now. The market is becoming more weighted in favour of those fortunate enough not to need a mortgage, be it investors, overseas buyers or downsizers.
Many are also in a stronger position than they might otherwise be, thanks to unusual gains in the stock market, commodities, and even cryptocurrencies, perhaps the result of years of money printing by the world’s major economies. Much of this wealth needs to find a home and for many, that’s increasingly becoming bricks and mortar.
This is depressing for a standard buyer who tends to be someone looking to get out of the rental trap, someone looking to start a home with a new partner or looking to accommodate a growing family. Once inflation is factored in, the home-owning dream for many will become ever further out of reach.”