Asking Prices Soar in May
The UK property market continues to surpass expectations as asking prices for homes experienced a significant surge in May. Despite concerns surrounding the Bank of England's interest rate hikes, an improved economic outlook and stable mortgage rates have outweighed the potential negative impact. Rightmove, a leading property website, reported a 1.8% increase in the average price of homes coming to the market compared to April.
Bucking the Forecast:
Earlier this year, experts predicted a potential decline of up to 15% in British house prices by mid-2024. However, the economy has proven to be more resilient than anticipated, avoiding the projected recession. The unexpected strength in the housing market can be attributed to increased confidence stemming from a better-than-expected economic performance.
Stability in Borrowing Costs:
Borrowing costs have eased from their peak following the "mini-budget" introduced by former prime minister Liz Truss in September. Although mortgage rates remain higher than pre-turmoil levels, Rightmove reported stable rates on a week-to-week basis. This stability has contributed to a sense of assurance among homebuyers and sellers alike.
Increased Confidence among Sellers:
The positive market activity, including a 3% rise in buyer demand compared to 2019, the year before the pandemic, has instilled confidence in sellers. Rightmove highlighted a noteworthy 1.8% increase in new seller asking prices in May, reflecting the growing optimism. Tim Bannister, Director of Property Science at Rightmove, emphasized the shifting sentiment among sellers, who are responding with increased pricing confidence. The gloomy market predictions made at the beginning of the year are increasingly appearing unlikely, leading to a more positive outlook for the industry.
Regional Market Overview:
Regional variations in house prices were observed across the UK. Scotland saw a remarkable increase of nearly 5% in average house prices, with the current average cost of a Scottish home reaching £191,407. Wales experienced a more modest 0.7% price increase, reaching £259,452, with properties typically remaining on the market for 52 days before finding a buyer. In contrast, the Northeast witnessed a slight drop of 0.2% in average house prices, with properties priced at £179,693. The Yorkshire & Humber region observed a robust 3.9% increase, with prices reaching £248,247. The East Midlands saw a 2% year-on-year climb to £288,311, while the East of England commanded an average price of £424,844. The Northwest experienced a 2.6% increase, with prices averaging £256,088, and the West Midlands witnessed a 2.2% rise, reaching £288,862. Unsurprisingly, London maintained its position as the region with the highest property prices in Britain, averaging around £696,477. Hackney, a borough within London, experienced the greatest increase of over 5%, with prices now reaching £724,189.
The UK property market has defied expectations, displaying robust growth in May. Improved economic conditions and steady mortgage rates have contributed to increased confidence among sellers, resulting in a significant surge in asking prices. Regional variations highlight the strength of the market across different parts of the country. As the market continues to adapt to evolving conditions, it is crucial for sellers to set realistic prices to ensure successful sales. With a positive outlook for the rest of the year, the UK housing market appears to be on a path toward normalization and sustained growth.