Early-bird buyers build market momentum but price sensitivity remains
- Average new seller asking prices rise by 0.9% (+£3,091) this month to £362,839. The annual price change moves tentatively back into positive territory after 6 months of annual price falls, with prices up by 0.1% on a year ago
- Agreed sales in the first six weeks of 2024 are 16% higher than over the same period last year, and 3% higher than in the more normal market of 2019, indicating that many early-bird buyers feel that 2024 offers the right conditions to move
- The growing market momentum is also evidenced by the increase in activity of both buyers and sellers on Rightmove with 7% more new listings coming to market than last year, and a 7% upturn in the number of buyers enquiring.
- However, the market remains very price-sensitive, and appears to be operating at two speeds, with properties that are priced accurately being snapped up by budget-conscious buyers, whilst over-priced properties are left on the shelf:
- It’s taking more than two weeks longer to find a buyer than at this time last year, with the average time to sell at its slowest since 2015, excluding the initial pandemic lockdown months of April & May 2020
- Rightmove analysis shows that sellers who price right initially are far more likely to sell quickly
- With the 2024 Budget approaching, more support to help first-time buyers onto the ladder would be welcome, with activity levels lagging behind in this sector as mortgage rates stay elevated and saving for a deposit remains challenging
Average new seller asking prices rise by 0.9% (+£3,091) this month to £362,839, in line with the seasonal rise we’d expect to see in February. Perhaps more noteworthy is that average prices are now up by 0.1% compared to this time last year, following annual falls in every month since August 2023, one of several signs of growing market momentum. The number of sales agreed in the first six weeks of the year is 16% higher than in the same period last year, indicating that early-bird buyers feel that 2024 offers the right market conditions to move, and they are already seizing the opportunity. However, the market remains price-sensitive, with many buyers very budget-conscious. Sellers who are over-optimistic and think that the more positive market sentiment will let them try asking for too high a price, risk being left on the shelf and missing out on the important Spring moving season.
“We said that February would be an important indicator for the year ahead, and the question was whether the Rightmove Boxing Day bounce in buyer activity would keep its spring into March or lose momentum. It’s proved to be the former, with the number of sales agreed continuing to considerably outstrip last year. Early-bird Boxing Day buyers got a head start in cherry picking from a record level of new property choice and have now been joined by many other buyers also believing that 2024 offers the right market conditions to move. Mortgage rates have fallen considerably from their peak and are now remaining broadly stable after the uncertainty of late 2022 and 2023. Momentum to move in 2024 is continuing to build, but prospective sellers mustn’t get carried away. Buyers now have more choice of property for sale and many are still very price-sensitive, with mortgage rates remaining elevated. Sellers who are serious about moving this year would be well-advised to ride this wave of increased buyer confidence with an attractive asking price before any pre-election jitters or unexpected events dampen the momentum.”
Tim Bannister Rightmove’s Director of Property Science
Sales agreed numbers are being supported by more buyer and seller activity. During the first six weeks of 2024, the number of properties coming on to the market was 7% higher than the same period last year, while the number of buyers enquiring to estate agents was 7% higher. The number of sales being agreed is now 3% higher than at this time in 2019, as these numbers continue their transition towards more normal levels.
Despite these positive activity numbers, the market appears to be operating at two speeds. Some agents report that properties that are accurately and competitively priced are being snapped up by budget-conscious buyers who are keen to make 2024 their year to move, having paused during the uncertainty of 2023. However, properties that are over-priced will immediately stand out against more competitively priced neighbours and are being left on the shelf by price-sensitive buyers. Evidence of this is that despite higher activity levels than last year, it’s now taking an average seller more than two weeks (16 days) longer to successfully find a buyer than at the same time last year. The time to find a buyer is at its slowest since 2015, excluding the initial lockdown months of April and May 2020. Buyers now have more time to consider which property is right for them, making it even more important for sellers to price temptingly and stand out from the crowd. Rightmove analysis also shows that sellers who price right initially are far more likely to find a buyer and sell more quickly.
As the 2024 Budget approaches, Rightmove’s data indicates that the first-time-buyer sector is most in need of government support, with buyer activity levels and sales in this sector the least improved compared to last year. While the mortgage market has recovered its stability, there are growing signs that the room for lenders to reduce rates further is narrowing, and that rates will settle at elevated levels for the near future. On top of this, inflation and cost-of-living pressures remain, making saving up a large enough deposit challenging for would-be first-time buyers.
“There continue to be reasons for cautious optimism as we settle into 2024, with encouraging activity levels and a more stable housing market. While some would-be buyers will continue to be affected by elevated mortgage rates and major affordability constraints, many other prospective buyers who can afford to do so, have acted fast and demonstrated their belief that 2024 is their year to get moving. It is still early days for 2024, with a Budget, General Election and no doubt more global events still to play out. With the Budget up next, the government will be considering a range of options to support movers and we expect to hear more policy rumours as the date approaches. Rightmove’s whole-of-market data shows that it’s the first-time-buyer segment who could use the most support this spring, and well-thought-out initiatives to help to get more would-be first-time buyers onto the ladder would be welcome.”
Tim Bannister Rightmove’s Director of Property Science
“It’s been a positive start to the year, particularly when compared to the slower pace of this time last year. There’s a sense of optimism, helped hugely by mortgage rates dropping in recent months, which now seem to have settled and remained stable, giving prospective buyers assurance and confidence. With lower mortgage rates on offer and more properties for sale, now is a good opportunity for any would-be buyers out there. Despite the affordability constraints, we are still seeing a good level of activity in the first-time buyer market, which is encouraging the next time buyers to review their situation and supporting movement further up the property ladder. There is a good audience of buyers out there for properties priced well, also providing opportunities for those looking to sell.”
Michelle Niziol, CEO at IMS Property Group in Oxfordshire
“The start of this year has seen renewed optimism and positive sentiment in the wake of a further pause in interest rates and January inflation held at 4%. Optimism breeds confidence, and confidence is translating into more sellers and buyers coming into the market. Activity is trending upwards compared to this time last year, which is encouraging, but the market remains price sensitive. Motivated sellers need to be realistic with listing prices and take advice on how to effectively position their sale in the current market. Buyer’s budgets are still being largely constrained by expensive mortgage products, so it’s a careful balance.”
Kate Eales, deputy head of residential at Strutt & Parker
“We are witnessing a good start to the year in London’s property market, with buyers acting earlier than usual. The surge in activity can be attributed to the decreasing and now stabilising mortgage rates, which have prompted many individuals who postponed their moves last year amid uncertainty to now re-emerge. The current momentum is further underscored by an increase in registered buyers year-to-date compared to the same period last year. This positive trend suggests a renewed confidence in the market, and as we move into spring, we anticipate a continued upward trajectory in both buyer interest and property transactions.”
Jimmy Waight, Head of Sales at John D Wood & Co in London
Price & Activity Trends
The first-time buyer monthly mortgage payment is based on Bank of England data of the averages for 90% LTV two-year fixed mortgages from lenders, and the average asking price of a typical first-time buyer home (two bedrooms or fewer) using the Rightmove House Price Index. The equivalent monthly rent is calculated using the same property types (two bedrooms or fewer).
The affordability to buy a first home is based on the Average Weekly Earnings (AWE) dataset from ONS multiplied by 4.5 to get the typical maximum that a person can borrow from a lender. The average asking price of a typical first-time buyer home is taken from the Rightmove House Price Index.