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UK house prices rose 0.8% in March from February, figures from Rightmove showed on Monday, as prices of the largest homes led with a 1.2% increase.
The online real estate company said the average price of properties coming on the market was £365,357, up slightly from £362,452 in February.
Rightmove said the increase is below the average monthly rise in March over the past 20 years, indicating a higher degree of pricing caution by new sellers than is usual for this point in the year.
The strong price rise in the larger home top-of-the-ladder sector of the UK house market was the exception to the caution seen elsewhere, with a 0.4% and 0.5% respective increase in the first-time buyer and second-stepper sectors, Rightmove noted.
New seller asking prices are £5,800 below the peak in October 2022, the property sales portal said, with annual price growth easing to positive 3.0%, which Rightmove said reflects a ‘more stable footing than many anticipated’ and a movement towards the ‘more normal market of 2019’.
‘The beginning of the spring season sees stability and confidence continuing to return to the market as it recovers from the turbulence at the end of 2022. The pace of the market reached an unsustainable level in the last two years, and was on track to slow to a more normal level, though the speed of this slowdown to more normality was accelerated by the reaction to September’s mini-budget,’ Rightmove analyst Tim Bannister said.
‘While higher mortgage rates and economic headwinds raise challenges, many potential home movers who were effectively side-lined in the frenetic bidding wars of the last two years will find that a slower-paced market gives them time to plan and secure their next move as we enter the traditionally busy spring-buying season.’
Rightmove noted that the recovery is being led by first-time buyer properties, with sales agreed improving the fastest. The company said that given the rising cost of living and higher mortgage rates, it is probable that many first time buyers are receiving support from family members, or have been able to avoid high rent payments by living with parents for longer.
Over the past two weeks, agreed sales in the first time buyer sector were 4% behind the more normal market in 2019, whereas they are 18% behind last year’s ‘exceptional level’.
Sales agreed in the larger homes sector are 10% behind the same period in 2019, while the second-stepper home sector lags at 13% behind 2019.
The rapid mortgage rate increase that also came in the wake of the mini-budget in September also continued to ease in March, with average rates for a 15% deposit five-year fixed mortgage standing at 4.65%, down from 4.75% in February, and 5.89% in October last year.
‘Lagging sales agreed in the larger homes sectors are likely to be caused by a combination of factors including fewer pandemic-driven moves to bigger homes, a more cautious approach to trading up due to the cost of living, and even perhaps concern over the running costs of a larger home,’ Rightmove’s Bannister said.
‘Meanwhile sales in the first-time buyer sector are likely being helped by some deposit assistance from family. The differing performance of smaller and larger homes highlights the multi-speed, hyper-local market.’
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