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UK house prices were largely unchanged in February, figures from Rightmove showed on Monday, in a sign of buyer confidence despite robust mortgage rates.
The online real estate company said the average price of properties coming on the market was £362,452, up ever-so-slightly from £362,438 in January.
It is the smallest February increase on record, Rightmove said, but the reading ‘could be seen as a positive indicator for the year ahead’.
There were worries that house prices would tumble in the face of interest rate hikes. Rightmove’s numbers suggest that may not be the case.
‘This month’s flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint. In addition to market conditions demanding greater realism on price, we are transitioning into a slower paced market, where buyers will take longer to find the right property at the right price due to the higher cost of servicing a mortgage,’ Rightmove analyst Tim Bannister said.
‘There are other indicators that this will be a softer rather than a hard transition, despite the turbulence at the end of 2022.’
The number of potential buyers contacting agents was up by 11% over the last two weeks, compared to 2019, as buyers increasingly return to the market, Rightmove said.
With the rising demand, sales agreed are now just 11% down on 2019’s ‘more normal market’ level. They had been down 15% from pre-virus levels at the beginning of the year and, 30% lower following the mini-budget announcement in September, which sent mortgage rates skyrocketing amid financial market turmoil.
The rapid mortgage rate increase that also came in the wake of the mini-budget has ticked downwards in recent months, with data indicating that a five-year fixed mortgage with a 15% deposit would now have an average rate of 4.82%, down from 5.9% in October 2022.
However, there remains a property shortage, with available properties down by nearly a quarter compared to 2019, while the number of homes for sale is up 48% from record low levels a year ago.
‘It’s a positive sign for the market to see many in the first-time buyer sector getting on with their moves, though despite average mortgage rates having edged down, some first-time buyers will still be priced out of their original plans and may need to look for a cheaper property, save a bigger deposit, or factor higher monthly mortgage repayments into their budgets,’ Bannister said.
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