The property market is showing signs of recovery, with confidence on the rise among buyers and sellers, according to Rightmove.
The property listing giant said the average asking price of newly-listed homes climbed 1.8 per cent in May to hit a record £372,894, but it added that buyers also seemed more optimistic.
Buyer demand also saw a 3 per cent lift compared to the same period in 2019 as the mortgage market continued to stabilise after the rapid rate rise at the end of last year.
The asking price monthly growth is the biggest so far this year, significantly higher than the historic average for the month of 1 per cent, and means the average home price tag is up £6,647, the property website says.
Prices dipped late last year as the market was hit by a sharp increase in mortgage rates
The increase in confidence has been aided by mortgage rates easing, although they remain far higher than they were in previous years. An average 5-year fixed for an 85 per cent loan-to-value mortgage is now 4.56 per cent, compared to 5.89 per cent last October.
Lenders offered cuts in February, when rates dropped to 3.75 per cent and ignited hopes of a rates war to push down prices, but have since risen to a more stable level between 4 and 5 per cent.
The top rates appear to have settled at about this level despite successive base rate rises. For those looking for a mortgage there are still deals available below 4 per cent, but only just.
At the same time, the discount from asking price to agreed sale price has ‘steadied’ to an average of 3.1 per cent in line with ‘normal market levels’.
Tim Bannister, Rightmove’s director of property science, said: ‘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 market activity of the pandemic years.’
However, Bannister warns that the market is still ‘very price sensitive’ and sellers must be careful not to overprice and then reduce as agents are reporting realistically priced new instructions are selling best.
May saw the highest price growth this year taking the average asking price to a record high
As the market recovers first-time buyers are leading the way as demand from the group sits at 6 per cent higher than pre-pandemic levels. Likewise, second stepper demand is 3 per cent higher.
On average first-time buyer properties are now taking 53 days to sell, up from 35 days a year ago. Second stepper properties are selling in 52 days compared to 28 last year.
However, larger properties are struggling because of overconfidence at the top of market taking 67 on average to agree a sale, up from a 35-day average this time last year.
Bruce Patterson, managing director at Corumin Ayrshire said, ‘Good homes in key residential areas are still attracting a lot of demand and selling quickly, and there is still an undersupply of homes for sale across all price points.
‘Accurate initial pricing remains key, and we’re seeing more sellers set competitive and realistic price expectations for the current market which also makes any overpriced stock stand out.
‘We’re still seeing a continuation of people relocating from cities and urban areas to coastal areas, where they make get more space and a bigger property for their budget. ‘
Average stock per agent ticked up in April rising to 47 properties from 45 in March. Regionally London saw the greatest price growth with the average property rising by 2.8 per cent over the month to £696,477 in May.
In contrast prices fell by 2.3 per cent in the North East, the only place to see negative growth over the month.
This post first appeared on Dailymail.co.uk
