The UK housing market is showing signs of vigor as we head deeper into 2024. According to Rightmove, the average asking price for a home across the nation now stands at £372,324, just £570 shy of the record high set in May of the previous year. This marks a significant rise, with the typical price of a property rising by £4,207 just in the month of April.
In London, the figures are even more pronounced. The average asking price for a house in the capital has reached a staggering £696,120. This represents a 1.4% increase from the previous month, equating to an additional £9,272, and a 2.8% rise compared to the same period last year.
Key Drivers Behind the Price Increase
The rise in house prices is largely fueled by the “top of the ladder” properties, such as larger family homes. These properties saw significant increases in new listings and completed sales, driving the average asking price up. The most significant increases were observed in London’s outer boroughs, with Merton and Barnet experiencing rises of 5.5% and 4.8% respectively.
Market Dynamics
The market is currently characterised by a higher demand than supply, which places sellers in a favorable position during price negotiations. This scenario is reflected across different segments of the market, though the rise in prices and market activity is more gradual among first-time buyers and those looking to take the second step on the property ladder. These groups are generally more dependent on mortgage availability and rates.
Matt Thompson, Head of Sales at Chestertons, noted an increase in both house hunters and sellers in April, fueled by speculation that interest rates might decrease in the coming months. This speculation may further empower sellers to hold or increase their asking prices.
Challenges and Opportunities
Despite these optimistic signs, the market remains sensitive to pricing. Sellers are advised to set realistic prices to secure sales, especially given the challenging conditions marked by high mortgage rates and significant house price growth of 22% since 2019. Tim Bannister, Director of Property Science at Rightmove, mentioned that although some buyers are benefiting from wage growth and relatively stable house prices, the overall affordability is still strained by the cost-of-living increases and stubbornly high mortgage rates, “The top of the ladder sector continues to drive pricing activity at the start of the year, with movers in this sector typically less sensitive to higher mortgage rates, and more equity rich, contributing to their ability to move. While some buyers, across all sectors, will feel that their affordability has improved compared to last year due to wage growth and stable house prices, others will be more impacted by cost-of-living challenges and stickier than expected high mortgage rates. Despite these factors, it has been a positive start to the year in comparison to the more muted start to 2023.”
Outlook for 2024
Looking ahead, the first four months of 2024 have been markedly more active than the same period in 2023, with a boost in both buyer and seller activity. Sales levels are on par with those seen in 2019, despite the tougher buyer conditions.
Bannister suggests that there could be a “tempting window of opportunity” for potential movers before the summer holidays and the upcoming general election, hinting at possible shifts in the market dynamics soon.