Property sellers have started the new year in a confident mood, with asking prices rising 1.3% in the first two weeks of January, Rightmove data reveals.
Average asking prices typically rise from a quiet December into a busier January, the property website said, but this increase is the largest for January since 2020 and more than double the 20-year average of 0.6%.
Its January house price index shows average asking prices have risen by £4,571 between December and January to £359,748.
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However, Rightmove said sellers still need to be realistic about their pricing to attract buyers and values remain down 0.7% compared with this time last year.
Asking prices were dropping towards the end of 2023 amid concerns of a market slowdown due to high interest rates and mortgage pricing, while the cost of living crisis continued to hit buyers' budgets.
This was reflected in other house prices indices that reflect sales rather than asking prices, with the Office for National Statistics, Halifax and Nationwide all reporting annual declines for much of the year.
But mortgage rates have fallen in recent weeks and buyers appear to be returning to the market.
Rightmove’s data shows the level of sales agreed was up 20% annually in the first week of 2024, while demand to view properties has risen 5%.
“After a stop-start market in 2023, the initial signs suggest a smoother year for movers in 2024,” says Tim Bannister, director of property science at Rightmove.
“More new sellers are now entering the market, and with more confident pricing. While the increased level of buyer activity that we’re also seeing may justify some of this increased pricing confidence from sellers, it’s important that sellers who are keen to find a buyer don’t get carried away with New Year enthusiasm when setting their price expectations.”
Where are asking prices rising?
Average asking prices have increased across most parts of the UK, according to Rightmove.
The largest increase was in the South East, where values rose 2.4% on average on a monthly basis.
However, sellers are still cutting prices in some parts of the country. Average asking prices were down 0.4% on a monthly basis in London and Yorkshire, while Scotland registered a 1.2% decline.
Asking price growth still remains pretty flat or down annually.
The biggest annual drops were in the east of England and the East Midlands, down 2.5% and 2.7% respectively.
Bannister says sellers must still be realistic with their pricing.
“Elevated mortgage rates and the wider cost-of-living squeeze are still limiting buyers’ spending power,” he adds.
“Accurate and realistic pricing for their local area is the recipe for success for sellers looking to get moving in 2024, and it’s been proven that over-optimistic pricing makes a move much less likely.”
North London estate agent Jeremy Leaf says it’s premature to say whether the recent improvement in activity will translate into a strong market recovery during early 2024, but he suggests the initial signs are encouraging.
“In our offices, we’ve seen a similar picture to that painted by the Rightmove survey,” he says.
“No New Year fireworks, but more valuations, viewings, listings and offers than this time last year.
“The mortgage rate war and improvement in lender appetite, combined with lower inflation and a strong jobs market, have helped to fuel expectations that prices may have passed their low point and more balance between supply and demand lies ahead.”
Will house prices rise in 2024?
Asking prices may be up but there is no guarantee that sellers will get the values they ask for.
There is a big difference between the average asking price, now £359,748 and actual property sale prices.
The latest Halifax house price index suggests average prices are at £287,105.
Rightmove has predicted that new seller property asking prices will drop by an average 1%.
Zoopla has predicted that UK house prices, based on sales, will fall by 2% during 2024 based on mortgage rates dropping to 4.5% by the end of the year and remaining there into 2025.
But some commentators have begun changing their mind as mortgage rates drop and analysts expect interest rate cuts earlier this year.
Property and estate agency brand Knight Frank issued new forecasts this week, suggesting prices may actually rise by 3%.
It had previously predicted a 4% fall.
“In October, financial markets were pricing in a single interest rate cut of 0.25% by the end of 2024. By the end of last week, they were expecting five,” says Tom Bill, head of UK residential research for Knight Frank.
“The main reason for this changing outlook is that inflation is falling faster than expected. As a result, mortgage lenders have dropped their rates fairly significantly in recent weeks, partly to win business in a low-volume market.
“The best five-year fixed-rate mortgage is now under 4%, which was made possible after the five-year swap rate fell a full percentage point over the final quarter of 2023.”
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