Mar 19, 2023
UK Property Sellers Lift Asking Prices Despite Worry About Slump
(Bloomberg) -- Britain’s property owners are continuing to bump up asking prices despite fears of a slump in the housing market, a survey showed.
The average asking price of homes put up for sale climbed 0.8% to £365,357 ($443,250) in March compared with the previous month, according to data from property portal Rightmove.
Sliding energy prices and persistently high employment levels in the UK have helped ease worries that the economy will tumble into a lengthy recession, which would hamper activity in the property market.
“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,” said Tim Bannister, Rightmove’s director of property science.
The Bank of England has hinted that it will soon pause its quickest cycle of interest-rate increases in three decades, and that would give a break to those who need to take out a mortgage to finance their purchases.
Average rates on a five-year fixed mortgage are now 4.65%, according to Rightmove, down from 4.75% last month and well below October’s peak of 5.89% in the turmoil which followed former Chancellor of the Exchequer Kwasi Kwarteng’s mini-budget.
They are still significantly higher than a year earlier, altering the calculus of buying a home. UK budget officials last week predicted that values will fall 10% from their peak in the fourth quarter of 2022.
Rightmove’s data may be a leading indicator of more widely-watched figures from mortgage lenders, who report on agreed sales rather than asking prices. Nationwide Building Society said house prices in January fell at their sharpest annual pace since 2012, as higher rates deterred buyers. Halifax by contrast said prices are rising at the sharpest pace in since June.
The number of market valuation appraisals in the UK, which is a leading indicator of supply, was 16.4% above the five-year average in February, Knight Frank data shows. Meanwhile, the number of new prospective buyers was 11% higher, suggesting supply outpaced demand last month.
According to Rightmove, typical first-time buyer properties with two bedrooms or fewer were leading the recovery. In this sector, average asking prices are now just £500 below last year’s record.
Sales of these properties were also recovering unexpectedly fast in March, Rightmove said — they are just 4% behind the same period of 2019, before the pandemic.
Owners looking to offload larger homes were facing more difficulty, however. Though asking prices climbed by 1.2% on a month earlier — a level which Rightmove said “appears over-optimistic” — sales of top-of-the-ladder properties are 10% behind the same period in 2019. In the second-stepper sector, they are 13% behind.
Despite the month-on-month rise in average asking prices, which followed a sharp increase in January and no change in February, prices are still £5,800 below October’s peak.
And the annual rate of change has continued to slow, falling to 3% in March from 3.9% in February.
“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,” said Bannister.
“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.”
©2023 Bloomberg L.P.