Fifth price record this year but further signs of pace easing
- Price of property coming to market hits a fifth consecutive record of £368,614, albeit only up by a modest 0.3% in the month (+£1,113), as the pace of price growth slows
- Affordability constraints, a better balance between supply and demand, and usual seasonal price drops will contribute to further slowing of price growth in coming months, with annual growth still on track to be 5% by the end of the year:
- Buyer demand for each available property is down by 8% in May compared to April, but remains 6% higher than last year, and more than double (+113%) the pre-pandemic five-year May average
- In addition, there are signs of more fresh choice for buyers, with the number of properties coming onto the market for sale up by 7% compared to this time last year, but still below 2019 levels
- Conveyancing log-jam means sellers need to come to market in the next few weeks to be in with the best chance of moving before Christmas, with the average time to get through conveyancing currently 150 days
- More than 500,000 homes are currently sold subject to contract, which is 44% higher than 2019
The average price of property coming to market hits yet another new record for a fifth consecutive month, rising by 0.3% (+£1,113) to £368,614. This is the smallest increase since January, as the pace of price rises starts to slow. Despite five consecutive interest rate rises and the increasing cost of living, buyer demand for each available property remains very strong, being more than double (+113%) the pre-pandemic five-year May average. However, we are seeing signs that this is continuing to ease, with this measure down by 8% in May compared to April. After a very strong first half of the year, it is likely that affordability constraints will have a greater influence on market behaviour in the months ahead, with further interest rate rises anticipated. This, alongside more choice coming onto the market for buyers and the usual seasonal variations we’d expect, means that there are likely to be some month-on-month price falls during the second half of the year. We expect this to bring house price growth by the end of the year to around the 5% we originally predicted in December.
“The exceptional pace of the market is easing a little, as demand gradually softens and price rises begin to slow, which is very much to be expected given the many record-breaking numbers over the past two years. When we look at the number of buyers contacting estate agents compared to 2019 or the pre-pandemic five-year average, demand is still very high compared to what was once considered normal. We’re hearing from agents that though they might have had slightly fewer enquirers for each property in recent months, they’re still seeing significant interest from multiple buyers and are achieving successful sales. Entering the second half of the year, we anticipate some further slowdown in the pace of price rises, particularly given the worsening affordability challenges that people are facing. We expect this to bring the annual rate of price growth down from the current 9.7% towards the 5% increase that Rightmove predicted at the beginning of the year.”
Tim Bannister, Rightmove’s Director of Property Science
Buyers are currently being welcomed with more fresh choice, with the number of properties coming onto the market up by 7% compared to this time last year. However, this measure remains down by 11% when compared to the same time in 2019.
A conveyancing log-jam means that those who are looking to move this year and have yet to act will need to do so in the coming weeks. It is currently taking 150 days to complete a purchase on average after agreeing a sale, 50 days longer than at this time in 2019. This means that those who are hoping to complete a deal in time to enjoy next Christmas in a new home, need to come to market in the next few weeks to give themselves the best chance of finding a buyer and completing the transaction by the end of the year. There are more than 500,000 homes that are currently sold subject to contract, a massive figure which is 44% higher than it was at this time in 2019, and 39% higher than the pre-pandemic five-year average.
“Existing homeowners looking to buy again will still need to put themselves in the best possible position to secure their next home in this strong market by making sure they find a buyer for their current property before looking for their next home. This is all the more important for those hoping to complete the process as quickly as possible and enjoy Christmas in a new home this year. Though December may feel far away, the data shows the current conveyancing log-jam means it is taking an average of 50 days longer to complete a purchase after agreeing a sale than it did in 2019. It’s therefore important to act now and get in touch with a local estate agent to give yourself the best possible chance of being in your new home for Christmas.”
Tim Bannister, Rightmove’s Director of Property Science
“The market is still performing well and many properties are still selling above asking price, albeit within the last month to six weeks we have noticed a slight slowdown. This could be due to more properties coming to market which we are starting to see and the current imbalance between high buyer numbers and low stock has corrected itself ever so slightly. Another reason for this could be market sentiment shifting somewhat based on the rising costs of living. It is too early to know if interest rate rises have had any impact within the market, although we are having conversations with buyers wanting to purchase now and fix their rate before further expected increases happen. As for completion times, these are still frustratingly long. Short chains with good estate agents progressing them is certainly what we look for when negotiating with multiple buyers these days. My expectation of the near future is that things will continue as they are for the coming months. There are simply too many buyers wanting to purchase, so there would need to be a huge shift in either increased stock levels and/or much lower buyer demand to correct the market.”
Oliver Gill, Director at Kirkham Property in Oldham
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.