"Though demand is softening from the heady levels we saw this time last year, the number of buyers enquiring is still significantly higher than during the last ‘normal’ market of 2019"
This month’s increase of 2.1% (+£7,400) is the highest at this time of year since May 2014, and marks a national jump of £55,551 in asking prices in the two years since the housing market shut due to the pandemic. This compares to a rise of just £6,218 in asking prices in the two years before the pandemic, and illustrates how the frenzied market activity has led to two-year price growth in cash terms never before witnessed in over twenty years of tracking prices.
Elsewhere, it remains a mixed picture.
The number of buyers contacting estate agents is 14% down on the 'stamp-duty-fuelled' market of this time last year, but is up by 31% on the more comparable market of 2019.
The number of properties available to buy is 55% down on the levels seen in 2019, meaning that supply and demand look likely to remain out of kilter for at least the rest of the year. The number of sales agreed is up by 12% in the year to date compared to 2019 even with restricted choice, though is down 17% compared to the exceptional market of the same period last year. Rightmove's report says these numbers suggest 'that a lack of homes for sale rather than a lack of desire from buyers is what is dictating the pace of the market'.
Tim Bannister, Rightmove’s director of property science, said:
“People may be wondering why the housing market is seemingly running in the opposite direction to the wider economy at the moment. What the data is showing us right now is that those who have the ability to do so are prioritising their home and moving, and the imbalance between supply and demand is supporting rising prices.
"Though demand is softening from the heady levels we saw this time last year, the number of buyers enquiring is still significantly higher than during the last ‘normal’ market of 2019, while the number of homes for them to choose from remains more constrained. We anticipate that the effects of the increased cost of living and rising interest rates will filter through to the market later in the year, and a combination of more supply of homes and people weighing up what they can afford will help to moderate the market.”
Rightmove analysis now also tracks first-time buyer affordability over the last ten years. This month, average monthly mortgage payments (£901) overtake average monthly rental payments (£887). However, the data shows that over the last ten years, the gap in payments has narrowed - meaning it is no longer notably cheaper to rent in terms of monthly outgoings.
This new affordability analysis is based on a household taking out a 90% loan-to-value mortgage, at the average two-year fixed interest rate, and looks at a typical first-time-buyer home of two bedrooms or fewer, and the average monthly equivalent rental payments.
The average monthly mortgage payment for a typical first-time-buyer home has increased by 13% (+£100) since December last year following four interest rate rises, although this is only 11% (+£87) higher than ten years ago. This may be surprising considering the strong house price growth over the last ten years, however it illustrates that a decade of historically low interest rates have effectively compensated for rising house prices in terms of monthly outgoings on a mortgage.
CEO of Octane Capital, Jonathan Samuels, commented:
“The UK housing market has certainly shifted down a gear or two when compared to the manic market conditions seen throughout the pandemic. This is only to be expected as the record levels of market activity seen over the last two years were simply unsustainable on a long term basis.
"Buyer interest and sales volumes remain very high, however, a correction is most certainly on the way, although this is likely to come in the form of a return to normality, not a market collapse.”