New seller asking prices increased by 0.9% (+£3,091) in January, taking the average asking price for a house in the UK up to £362,839, according to data from UK property site Rightmove.
If we look back over the past twelve months, house prices are now up 0.1% compared to a year ago. This is the first time the annual price change figure has been in positive territory for six months.
While this rise could be a seasonal increase in activity, as the market tends to pick up in February, property experts say the market has had a good start to the year compared to 12 months ago.
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“It’s been a positive start to the year, particularly when compared to the slower pace of this time last year”, says Michelle Niziol, CEO at IMS Property Group in Oxfordshire. “There’s a sense of optimism, helped hugely by mortgage rates dropping in recent months”.
Despite this renewed optimism, it is still taking many sellers a long time to find a buyer. But does Rightmove’s data suggest the market is picking up in 2024?
Increase in agreed sales – is it a good time to buy?
Rightmove’s data showed there were 16% more agreed sales in the first six weeks of 2024 than over the same period last year. In other words, some market participants clearly think now is a good time to buy.
For a couple of reasons, this may not come as a surprise.
House prices fell by 1.8% over the course of 2023, according to the Nationwide House Price Index, as the cost of living crisis and soaring mortgage rates caused the property market to stall. This has created the opportunity for some buyers to take advantage of slightly lower prices.
Furthermore, interest rates have stabilised since the summer, and mortgage rates have fallen from their highs as a result.
“There continue to be reasons for cautious optimism as we settle into 2024, with encouraging activity levels and a more stable housing market”, says Tim Bannister, Rightmove’s director of property science.
“While some would-be buyers will continue to be affected by elevated mortgage rates and major affordability constraints, many other prospective buyers who can afford to do so, have acted fast and demonstrated their belief that 2024 is their year to get moving”, he added.
The good news for prospective buyers is that there is now far more choice available to them. Rightmove has reported that the number of sellers listing properties has increased by 7%.
Is now a good time to sell?
Sellers will be pleased to note that there is far more activity in the housing market this year than last. There were 16% more agreed sales in the first six weeks of 2024 than the same period last year, Rightmove reports.
While last year was a particularly slow period for the UK housing market, this still constitutes 3% more activity than was seen in the same period in 2019 – well before inflation and interest rate hikes took hold.
Despite this increase in activity, though, it is still taking a long time for some houses to find a buyer. In fact, Rightmove reports that the average time to sell is at its slowest since 2015.
In other words, even though more people are now looking to buy, it could take you around 16 days longer to sell your house than this time last year. Against this backdrop, getting the price right is more important than ever.
“Momentum to move in 2024 is continuing to build, but prospective sellers mustn’t get carried away”, says Bannister. “Buyers now have more choice of property for sale and many are still very price-sensitive”.
Research from Rightmove shows that you’re far more likely to sell your house quickly if you get the price right the first time. So, while it might be tempting to try your luck, an overly ambitious asking price could end up coming back to bite you.
What’s more, if you’re looking to sell, it could be a good idea to move quickly, says Bannister. “Sellers who are serious about moving this year would be well-advised to ride this wave of increased buyer confidence”, he says, noting that “pre-election jitters” or “unexpected events” could “dampen the momentum”.
What’s the outlook for mortgage rates?
Mortgage rates have fallen from their highs in the summer, but remain elevated compared to the long-term average.
The average two-year fixed rate mortgage is currently 5.69%, according to Moneyfacts, and the average five-year is 5.27%. That’s down from a peak of 6.88% and 6.72% respectively in August.
Many are hoping that rate cuts are on the horizon, with the Bank of England having held the base rate steady at 5.25% at its last four rate setting meetings. However, inflation did not fall in January, but remained stuck at 4%. Against this backdrop, interest rate cuts might not be coming as soon as some had hoped.
So, if you’re holding off buying a property until mortgage rates fall further, you could find yourself hanging around for a while. Furthermore, if house prices increase in the meantime, you could find that this cancels out any savings.
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