Typical spring bounce bolstered by pent-up demand
House prices rose 0.8% in May as pent-up demand was unleashed, according to Rightmove.
The latest data from the online property portal showed the average price of property coming to the market had reached a new record of £375,131 in the month, an increase of £2,807 compared to April. Prices were also 0.6% up compared to the same month in 2023.
Rightmove attributed the increase in home-mover activity to would-be buyers who paused their plans last year.
The number of sales agreed in the first four months of 2024 is 17 higher than last year, outstripping the 12% increase in the number of new sellers coming to market.
It noted, however, that May is typically a strong month for price growth, with new price records having been set in the month in 12 of the previous 22 years.
“Some predicted that property prices would suffer sharp falls and take a while to recover following the Bank of England increasing the Base Rate up to 5.25%, where it has remained since August 2023,” said Tim Bannister, Rightmove’s director of property science.
“However, the momentum of the Spring selling season has exerted enough upwards price pressure to reach a new record asking price.
“However, it’s important to remember that prices overall are still only 0.6% ahead of this time last year.
“The market remains price-sensitive, and with prices reaching new records in the majority of regions and mortgage rates remaining elevated, affordability for many homebuyers is still stretched.”
Rightmove noted that despite high transaction levels, agents and movers were facing challenges with average delays of 154 days between agreeing a sale and legal completion.
>> Read more: March house prices ‘largely unchanged’ compared to last year, Zoopla figures indicate
Bannister added: “We expect that the improved market activity levels and conditions this year will result in higher transaction numbers at the end of 2024 than last year.
“However, the extremely lengthy legal completion process is a frustrating barrier to home-movers converting agreed sales into completed transactions more quickly.”
Nick Leeming, chairman of Jackson-Stops, speculated that demand could be further boosted if interest rates drop, easing affordability constraints.
“With inflation falling, there is hope the wait may come to an end soon as the Bank of England may look for an economic boost before the General Election,” he said.
He added that the more positive macro-economic outlook of recent weeks had led some to revise house price forecasts for the year upwards from decline to growth.
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