House prices reach record high in May

Property asking prices climbed to  £372,894 in May; the biggest monthly increase of the year so far. As reported by Rightmove’s House Price Index, the rise of 1.8% is considerably higher than that of April, at just 0.2%. Equating to a jump of  £6,647 in properties coming to the market, the increase is being viewed as a sign of rising confidence from sellers.            

Rightmove also revealed the number of agreed sales is currently just 3% behind the more market-typical levels of 2019, but buyer demand is up. According to their data, first-time buyers are up 6% on 2019 figures with second-steppers also up at 3%. The average reduction in asking price to agreed sale price was 3.1% which again is a sign of confidence returning to the market.              

So, does this mean the property market is returning to a healthier state? Oliver Meddick, COO of Home Legal Direct, provides his insights.             

What caused the sudden rise in asking prices?

 Although asking prices increased suddenly, there are reasons behind it. Now that the cost of living crisis is starting to ease, people’s views on moving are also beginning to improve. However, the more common reason for any price increase is due to a lack of stock. As the data from Rightmove confirms, there are less properties for sale in the market, but buyers are very much still present.

Why is buyer demand still high?

 Mortgage lenders have remained steady in recent months which is bringing buyers back to the market. Keep in mind that mortgage rates have continued to be stable despite the base interest rate going up. This is due to lenders having already considered the interest rate rises for the year in the products they are offering now. This, combined with an easing of their criteria, is encouraging buyers back to the market. This naturally contributes to a price increase as buyers enter a market with less properties for sale and therefore increased competition.

What could this mean for the market?

 The current market activity does bring the question, are we in an increase bubble or are we going to see steady growth as we go into 2024? While I’m optimistic, I think it is more likely to be a bubble of recovery. Over the previous few months, there has not been a price increase comparable to this. That to me says we are experiencing a correction of those months as the market tried to catch up, resulting in the sharp price increase that we have seen.”

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