Rightmove: UK house prices up just £14 in February as property market stalls
Rightmove’s house price index recorded the smallest ever increase from January to February.
Rightmove’s latest house price index reading shows the average asking price for a UK property was up just £14 in January. That’s the smallest ever increase for the period since the online real estate agent began recording data in 2001.
The average price tag price for a UK home is now £362,452, according to Rightmove. The index previously recorded an increase of 0.9% from December to January, or £3,301.
The online property portal isn’t the only outlet observing a slowdown in the market.
The Royal Institute of Chartered Surveyors recently said UK home buyer demand is currently at its weakest since 2009.
Meanwhile, Halifax reported house prices stalled in January following four months of falls, while Nationwide recorded a fifth consecutive monthly decrease in the average UK property price.
Sellers “getting the price right the first time”
“The big question this month was whether we would see new sellers increasing their asking prices, as has been the yearly norm as we approach the spring selling season,” said Tim Bannister, Rightmove’s director of property science.
“This month’s flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint.”
Market conditions have demanded “greater realism on price”, Bannister added. Though mortgage rates have fallen over the last few months they remain elevated, making buyers question whether now is a good time to buy a house.
The data reflects that those who are still looking to buy are taking “longer to find the right property at the right price due to the highest cost of servicing a mortgage”, Bannister said.
Buyers looking to sell have had to heed their agents’ advice to “price right the first time” to ensure a sale more quickly.
Additionally, buyers now have far more choice. The number of homes for sale is up 48% from the record low levels of last year.
London house prices show strength
Asking prices in the capital were up 2.1% to over £680,000, one of their fastest monthly increases.
Average asking prices in the borough of Camden have shot up 17% over the last year to a staggering £1.2m while Barking and Dagenham remains the cheapest borough with an average asking price of £371,000.
House prices in the East Midlands saw their biggest monthly decrease, falling 2.3% between January and February. In Scotland house prices were up 7.5% month-on-month.
Where will house prices go in 2023?
While it looks as if house price growth has stalled, that could be good news, according to Rightmove. It believes prices remaining flat instead of falling could be a “positive indicator for the year ahead.”
Additionally, the number of potential buyers has risen 11% over the last two weeks compared to the same period in 2019 and the number of sales agreed has also rebounded - now just 11% down on 2019’s levels, from 30% down in the aftermath of the mini-budget.
“Transitions from a fast to a slower-paced market have historically had many different
paths, and whilst it’s early days the combination of sellers being more realistic on price and an improving picture on the number of sales being agreed suggests a softer landing for the market than many expected,” the report said.
The figures suggest many buyers are “seeing reasons to get on with their moves, and have the confidence to return to a market which, so far, is stronger than many expected.”
Financing conditions are also improving. HSBC recently became the first lender to launch a 3.99% fixed-rate mortgage since September, signalling the beginning of a price war in the mortgage market.
Still, the average two-year fix remains high at 5.6%, while the average five-year deal is 5.4% according to Moneyfacts, significantly higher than the 2% rates we saw at the end of 2021.
But some analysts expect house prices to fall by as much as 30% in 2023, so the future of UK house prices remains uncertain, especially with another interest rate rise on the cards and the increased cost of living.
“The frantic market of recent years was unsustainable in the long term, and our key indicators now point to a market which is transitioning towards a more normal level of activity after the market turbulence at the end of last year,” said Bannister.
The first-time buyer sector is recovering better than the upper-end sector, but some first-time buyers could still find themselves priced out of their original plans, especially as the cost of living remains high, with CPI inflation remaining high at 10.1%.