Property News

House Prices Rise Higher Than Expected in January

House Prices Rise Higher Than Expected in January

The average price of a home jumped by £3,301 this month, at the same time as Rightmove saw double the amount of inquiries from prospective buyers.

Across Britain the average asking price is now £362,438, which is 0.9% higher than in December, Rightmove said.

It follows two months of falling prices, with January's typical price tag still £8,720 lower than October's peak. Tim Bannister, Rightmove's director of property science, said it was "particularly encouraging" for movers who are looking for a "calmer, more measured market" after the "chaotic economic climate of the final few months of last year. The early-bird sellers who are already on the market and have priced correctly are likely to reap the benefits of the bounce in buyer activity, while over-valuing sellers may get caught out as property stock builds over the next few weeks and months, and they experience more competition from other better-priced sellers in their area."

Rightmove said the volume of prospective buyers sending inquiries to estate agents about homes is up 55% in the last two weeks, indicating pent-up demand. Buyer demand is up 4% compared to the same period in the last "normal" pre-pandemic market of 2019.

However, it is still down by 36% compared to last year's busiest-ever start to a year as the market navigates a more normal level of activity. Meanwhile, on 5 January, the number of people requesting an estate agent to value their home was the third largest on Rightmove's records.

Matthew Thompson, head of sales at Chestertons, said 2023 kicked off with a high demand "from buyers who no longer want to delay their search and want to benefit from a slightly better choice of mortgage products. This month so far, our branches noticed a 25% increase in viewings compared to January last year. Whilst buyer demand is strong, the number of market appraisals remains comparably low as some sellers are still observing how the market might be developing in the first quarter of this year."

Gareth Overton, head of residential sales at Henry Adams, shared that along with increases in viewing levels seen so far this year, they are also receiving more requests for valuations. “This bodes well for a reasonably balanced market in the months ahead, where supply and demand are more evenly matched,” he commented.

Simon McCulloch, chief commercial and growth officer at Smoove, agreed that the jump in house prices and rising interest among prospective buyers signals an encouraging start to the year for the housing market, after the tumultuous closing months of 2022. “While demand may be dampened in the coming months by any further Bank of England base rate hikes, the positive signs in the market as we move through January are very welcome,” McCulloch remarked.

Number of homes for sale still down

However, even with the prospect of more sellers coming to the market, the number of available homes for sale is still below long-term norms, the website said. Mr Bannister said: "We expect that the full effect of affordability constraints and last year's mortgage rate rises will hold back some segments of the market in the first half of the year, but our leading market indicators may start to identify some green shoots of growth that will go on to strengthen in the second half of 2023."

 

Surge in homes sold within a month as cash buyers pounce on price slump

Cash buyers have pounced on falling house prices to buy bargain properties, as the number of homes selling within a month surged in December. The share of properties selling within 30 days of coming to market surged to 60% in December, up from 42% in November and 53% in the same month in 2021, according to analysis by property website On The Market.

Jason Tebb of the company said: “There are still deals to be done and evidence suggests that serious buyers and sellers continue to engage with each other despite macroeconomic headwinds.”

House prices fell for the fourth month in a row in December, dropping by 1.5% compared with November, according to lender Halifax. The fall brought the annual growth rate down to just 2%, down from a peak of 12.5% in June. The average house price is £281,272.

The share of mortgage-free bidders in the property market rose as cash buyers swooped to purchase properties at knock-down prices. Cash buyers accounted for 36pc of buyers in the UK last month, up from 33% in November, according to a survey of 120,000 homemovers by On The Market.

Mortgage-free buyers were most prevalent in Scotland, where almost half intended to buy with cash, and least common in London, where less than a quarter were cash buyers. Experts said this was because high property prices meant the majority of purchases required a loan. Marc Schneiderman, of estate agency Arlington Residential, said the uncertainty surrounding mortgage rates and affordability in recent months meant cash buyers were even more sought after by sellers.

Mr Schneiderman said: “There were several sales where cash buyers had their offers accepted at slightly lower levels than those needing finance. The speed at which unencumbered buyers can contract, coupled with the uncertainty in the mortgage market for those buyers needing a loan, gave cash buyers more of an upper hand than at any time in the last 15 years.”

 

The one type of property resisting the house price slump

Eco-friendly homes are weathering the housing market better than period properties, new data has suggested.

Six out of ten (61pc) of estate agents believe energy-efficient homes are holding their value, according to a survey by the Royal Institution of Chartered Surveyors, a trade body. It comes as new official data shows average house prices have fallen for the first time in a year. Prices dropped 0.3% in November, according to the latest figures from the Office for National Statistics.

Around 40% of estate agents said they were seeing greater interest from buyers in homes that are more energy efficient. Like agents reported sellers trying to attach a premium on homes with a high energy efficiency rating. The survey reflects the growing significance of energy performance certificates in the housing market.

Landlords are increasingly turning their backs on older homes amid concerns about proposals to require all newly rented properties to have a C rating or above. Upgrades to achieve a higher EPC rating can cost thousands of pounds. Soaring energy bills have also made these properties less appealing for prospective homeowners.

Jonathan Hopper, of buying agents Garrington Property Finders, said older homes that require upgrades are seeing greater price reductions in order to attract buyers. He said: “Properties that require refurbishment and a lot of work doing to them have fallen out of flavour. The call on cash to service debt and get the deposit where it needs to be to balance the mortgage figures at the moment has meant a lot of people that may have taken on a project are just not interested. Building costs have spiralled and getting hold of a builder is a challenge in itself, and then the expense of actually going through a full refurbishment with an unknown end value is just not appealing to buyers.”

The RICS survey also indicated that house prices were falling in more areas. The organisation’s price gauge fell further into negative territory, with a net balance – the difference between respondents reporting higher rather than lower prices last month – of -42%, down from -26% in November.

RICS said the “downward trend” in prices was “gaining further impetus”. All regions across England are now seeing prices soften but sentiment declined most sharply in East Anglia and the South East. By contrast, the house price readings in Scotland and Northern Ireland had a marginally positive net balance, but this was still down from strong growth reported six months ago.

The gauge for new listings fell to its lowest level since September 2021, with a net balance of -23%. Enquiries from new buyers had a negative reading of -39%, down from -38% the previous month. Agreed sales continued to plunge as the sales gauge hit -41%, compared with -36% last month.

More respondents said they expected sales to continue falling. Prices are forecast to continue dropping but estate agents were slightly less negative than they were in November. In the rental market, tenant demand rose and the number of properties becoming available to rent continued its downward trend, meaning rents are expected to keep rising.