The average price of newly listed homes for sale has risen by 0.8% this month to £371,042, a typical seasonal increase following the unusual flat month in February, the latest Rightmove data shows.
The return of monthly price growth reflects the start of the spring selling season, but the pace of growth remains modest, in line with the average over the last 20 years but lower than the last two.
The number of homes for sale remains a key factor limiting more significant price growth, as the eleven-year high level of supply is giving buyers more choice and forcing new sellers to be more restrained and realistic. Buyer affordability has improved, with wages growing faster than house prices while mortgage borrowing power has increased. Competition to find a buyer is fierce, which has led to the longest time to find a buyer at this time of year since 2013.
Market activity remains stable so far despite new global uncertainty
Market activity in March appears stable so far despite the new geopolitical uncertainty created by the Iran war. The latest real-time snapshot of daily market activity at the time of writing shows that the number of sales being agreed is only 2% behind the strong market of this time last year, and 5% ahead of 2024.
This suggests that home-movers are continuing with deals despite headlines about potential mortgage rate rises and increases to fuel and energy costs. In addition, the number of new listings coming onto the market over the same period is just 3% behind last year, and 7% ahead of 2024. New buyer demand was already running lower than in last year’s busier market but has fallen no further since the beginning of the Iran war. Rightmove says it’s too early to assess what the full impact of these geopolitical events on the market, but noted it has not seen the same kind of immediate and sharp response from movers that there was to previous events, such as stamp duty changes or the rapid mortgage rate rises in September 2022.
Affordability a key driver in price-sensitive market
Affordability remains a key driver of activity in the current price-sensitive market, indicated by regional and sector splits. The lower priced North of England, Scotland and Wales are seeing stronger annual price growth than the more expensive southern England, with the North West leading the way with a 2.6% annual increase in prices compared to London’s 2.1% fall.
Meanwhile, smaller 0-2 bedroom properties, which are typical starter homes, have fallen in price by a national average of 0.4% over the last year. By contrast, middle market second-stepper homes are up by 0.6% and prices for the largest top-of-the-ladder homes are flat. Slight price falls for typical first homes may provide a window of opportunity for deposit-ready first-time buyers this spring, though saving up a deposit remains a challenge when average rents are near record levels and cost-of-living pressures persist.
Colleen Babcock, property expert at Rightmove, commented: “March has brought a typical seasonal lift in prices, and ‘steady rather than strong’ is how I’d describe the start of this year’s spring market. With the number of homes for sale at its highest level for over a decade, buyers have plenty of choice. Many sellers are facing stiff competition and the longest average time to sell at this time of year since 2013. In this kind of market, being not only competitive on price, but competitive from the outset when setting an asking price for your home is critical. Our research shows that relying on later price reductions is a much tougher and less effective strategy when buyers are very price sensitive and have so many alternatives to choose from.
“Market activity remains stable so far in March which is encouraging given the new global uncertainty over the last few weeks, though it’s too early to tell what may happen later down the line. That said, uncertainty is never helpful for market activity, and it’s come at a time when confidence and optimism would usually be building as the spring market gets underway. It’s understandable that many potential buyers may have one eye on news about mortgage rates and wider household costs. For context, the average monthly mortgage payment on a new purchase has increased by around £45 so far, but is still around £70 lower than it would have been at this time last year.”
