According to Rightmove, a recovery in the large family home market has seen property asking prices rise for the fourth month in a row.
The price of the average new property listed rose by 1.1 per cent or £4,207 to £372,324 in April.
And the property website said a driving factor behind the current growth was sales of larger homes at the top of the ladder, where asking prices have risen 2.7 percent in a month and are rising at the fastest pace since 2014.
The latest increase means the average newly listed property has risen in price by 1.7 per cent since April 2023 and is just £570 below the peak in asking prices recorded in May last year.
On the plus side, the average asking price is now up 1.7% compared to a year ago and just £570 short of the May 2023 peak
This means that prices are rising more slowly in the more mortgage-dependent starter and second-step sectors.
Rightmove also reports a much busier start to the year than the first four months of 2023.
The number of new sellers coming to market is up 12 percent compared to this time a year ago, while the number of sales agreed is up 13 percent.
However, a large part of the activity is once again taking place in the top sector, which consists of four- and five-bed homes.
The number of new sellers in this sector is up 18 percent compared to this time last year, and the number of sales agreed is up 20 percent.
Real estate agents say increased choice in the larger home sector is encouraging previously reluctant homeowners to come to the market, creating a cycle of more new listings that leads to more sales activity.
Fourth month in a row: The average asking price of property coming onto the market increases by 1.1% (£4,207) this month to £372,324
In the more mortgage-dependent market for first-time buyers, the number of new sellers has increased by 10 percent, and the number of agreed sales by a more modest 9 percent.
Mortgage rates have not fallen as much as some people expected at the beginning of the year and recently rates have risen sharply again.
According to Moneyfacts, the average two-year mortgage interest rate has risen from 5.56 percent to 5.81 percent since the beginning of February.
Meanwhile, the average five-year interest rate has risen from 5.18 percent to 5.38 percent.
According to Rightmove, the greatest growth in activity is taking place in the largest homes
Tim Bannister, a property expert at Rightmove, said: ‘The top sector continues to drive price activity at the start of the year, with movers in this sector generally less sensitive to higher mortgage rates and owning more shares. contribute to their ability to move.
‘While some buyers, across all sectors, will feel that their affordability has improved compared to last year as a result of wage growth and stable house prices, others will be more affected by the cost of living challenges and more persistent than expected high mortgage interest rates.
Jeremy Leaf, a north London estate agent and former chairman of Rics, says buyers are negotiating hard
“Despite these factors, it was a positive start to the year compared to the more subdued start to 2023.
‘However, agents report that the market remains highly price sensitive, and despite current optimism, these are not the conditions to support substantial price growth.’
Jeremy Leaf, North London estate agent and former chairman of Rics Residential, added: ‘The market continues to catch up as the increase in new inquiries encourages sellers not only to make their properties available, but also their to take a chance on higher demand figures. .
‘The prospect of more stable or even falling mortgage rates certainly helps improve confidence in general.
‘However, the increase in supply has led to more choice, so the market remains price sensitive and buyers are negotiating hard, especially those who rely on little or no financing.’
What now with the mortgage interest?
At this point, it doesn’t look like mortgage rates will drop dramatically anytime soon.
This is despite markets anticipating three key rate cuts by the Bank of England before the end of this year.
Fixed rate mortgage prices are reflected in Sonia swap rates. Mortgage lenders enter into these agreements to protect themselves against the interest rate risk associated with providing fixed-rate mortgages.
Put more simply, Sonia swap rates show what lenders think the future holds in terms of interest rates, and this drives their pricing.
This means that the current mortgage interest rate has already baked in future interest rate declines to some extent.
From a historical perspective, it is also very rare for the lowest priced fixed mortgage rate to fall below the equivalent swap rate.
Back in the right direction: Since the beginning of February, the average two-year fixed-rate mortgage has risen from 5.56% to 5.81%, according to Moneyfacts
Currently, the lowest five-year fixes are about 4.2 percent and the lowest two-year fixes are about 4.6 percent.
On April 17, five-year swaps were at 4.13 percent and two-year swaps at 4.67 percent – both below current base rates and largely in line with whether the cheapest fixed rate deals are currently available.
Nicholas Mendes, mortgage technical manager at estate agent John Charcol, said: ‘The market desperately needs some positive move from the Bank of England. Until we see a rate cut, we will see a period of rate increases as markets start to rise. be restless.
‘Mortgage holders who are coming to the end of their fixed contracts this year and early 2025 should be prepared for interest rates to be higher than in previous forecasts.
“Initial predictions of a fixed rate of 3.5 percent between August and the end of September are highly unlikely, as any sign of such a deal is now postponed until later in the year.”
What next for the real estate market?
Overall, the number of sales agreed is now at the same level as in 2019, despite higher mortgage rates, Rightmove said.
This may be partly because people’s wages have risen in recent years.
Nicholas Mendes, mortgage technical manager at John Charcol, says the mortgage market is ‘urgently in need’ of positive move from the Bank of England
Although average property prices are 22 percent higher than in 2019, affordability has been helped by average wage growth of 27 percent over this period, slightly faster than house price growth, according to Rightmove.
Andrew Wishart, senior economist at Capital Economics, said: ‘The slight increase in mortgage rates since the start of the year is likely to cause house prices to stagnate in the short term.
‘Although the house price-to-earnings ratio has returned to 2019 levels thanks to strong wage growth and a decline in house prices, higher interest rates mean that buying a home with a mortgage is still more expensive by past standards.’
However, according to Wishart, house prices will soon start rising again. Capital Economics predicts that home prices will end the year up 3 percent and then rise another 5 percent in 2025.
“Lower inflation and significant cuts in base rates mean that mortgage rates should fall substantially by 2025,” Wishart said.
“And as borrowers appear content to borrow over longer periods and spend more on repayments, that is likely to push prices up further.”
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