House Price Index

May 2023

Prices hit record high as new sellers respond to improving market

  • The average price of property coming to the market jumps by 1.8% (+£6,647) this month to reach a new record of £372,894 in a delayed response to the higher-than-expected level of market activity since the start of the year:
    • This 1.8% monthly increase is the biggest of the year so far, and is significantly higher than the historic average May rise of 1.0%
    • Agreed sales numbers are currently just 3% behind the last more normal pre-pandemic market of 2019
    • The discount from final asking price to agreed sale price has steadied at an average of 3.1%, in line with normal market levels, reflecting home-mover confidence in the outlook for the market
  • Whilst increased price confidence appears to be more justified in the lower and middle market sectors, there are some signs of over-optimism in the top-of-the-ladder sector, as some discretionary buyers hang back:
    • Buyer demand is 1% lower than in 2019 for top-of-the-ladder properties, compared with 3% above 2019’s level in the second-stepper sector, and 6% above in the first-time-buyer sector
  • Average mortgage rates are remaining steady despite another increase in the Bank of England base rate:
    • An average 5-year fixed, 15% deposit mortgage is now 4.56%, compared to 5.89% last October

Average new seller asking prices jump by 1.8% (+£6,647) this month, compared with the historical average May rise of 1.0%. This is a new record high of £372,894 as sellers respond with increased pricing confidence to a market that is defying start-of-the-year expectations. Earlier in the spring season we were seeing some caution on asking prices from new sellers despite positive signs for activity levels, as home-movers continued to navigate the fallout from the mini-Budget. Now, with buyer demand 3% higher than in 2019 and sales agreed just 3% behind 2019’s levels, this positive activity has belatedly filtered through to new sellers’ asking prices. However the current multi-speed, hyper-local market is still price-sensitive, and buyer affordability is still stretched. Whilst increased seller pricing confidence in the first-time-buyer and second-stepper homes sectors has more justification, there are some signs of over-optimism in the top-of-the-ladder sector.

“This month’s strong jump in new seller asking prices looks like a belated reaction and a sign of increasing confidence from sellers, as we’d usually see such a big monthly increase earlier in the spring season. One reason for this increased confidence may be that the gloomy start-of-the-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 activity level this year following the exceptional activity of the pandemic years. Steadying mortgage rates and a generally more positive outlook for the economy are also contributing to more seller confidence, though there are likely to be more twists and turns to come. The market is still very price-sensitive and it is important that new sellers do not damage their prospects of a sale by overpricing initially and reducing later, with agents reporting that it’s the realistically-priced new instructions that are selling best.”

Tim Bannister Rightmove’s Director of Property Science

The average discount from the final asking price to the agreed sale price has steadied at an average of 3.1%, in line with pre-pandemic market levels. More predictable price patterns reflect home-mover confidence in the more normal market this year, following the uncertainty at the beginning of the year.

The number of buyers enquiring to agents about homes for sale is now 3% higher than at this time in the last more normal market of 2019. This is led by the first-time-buyer and second-stepper sectors, with buyer demand now 6% and 3% above pre-pandemic levels respectively. However, there are signs of some over-optimism in the top-of-the-ladder sector, which has the fastest-rising prices this month despite buyer demand in this sector being 1% lower than at this time before the pandemic. While properties in this largest-homes sector are still selling faster than in 2019, it is now taking an average of 67 days to agree a sale, nearly double the 35-day average at this time last year. This is the biggest increase in the time taken to find a buyer, with second-stepper properties now taking 52 days on average compared to 28 days last year, and first-time-buyer properties now taking 53 days, up from 35 days a year ago.

A steadying in average fixed-rate mortgages is also contributing to greater home-mover confidence. The average rate for a five-year fixed, 15% deposit mortgage is now 4.56%, down from 5.89% in October. To add some further context, this compares to 4.52% last week. With mortgage rates starting to remain relatively stable week-to-week despite a further Bank of England increase in the base rate, home-movers can more easily understand and plan for the expected costs of their mortgage.

Rightmove’s House Price Index is based on the largest and most up-to-date sample of properties coming to the market for sale, meaning that we are in a unique position to be the first to identify any early changes in the market. We expect our monthly price increases to be reflected in other indices over the coming months.

“This month’s record price is a strong indication of sellers’ confidence, and we can see from activity levels and the still relatively limited choice of property for sale that this confidence is justified in some segments of the market. More discretionary sellers at the top-end may be prepared to price high and wait for the right buyer, and whilst it is positive that they appear to feel no financial pressure to sell, the data suggests that some sellers in this sector will need to price more competitively if they want to find a buyer in the current market. 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.”

Tim Bannister Rightmove’s Director of Property Science

The House Price Index is the largest, most up-to-date monthly sample of residential property asking prices. The index monitors changes in house prices both annually and monthly, providing a comprehensive view on the current state of the property market in England, Scotland and Wales.

Based on circa 95% of newly marketed property, the Rightmove House Price Index is the leading indicator of residential property prices in England, Scotland and Wales.

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