Rightmove’s house price index shows average asking prices grew by 1.7% month-on-month, or £5,760, to stand at £354,564 in March 2022. Rightmove says prices last rose this steeply in March 2004.
The latest increase contributed to an overall rise in the annual growth rate for average house prices of 10.4% to March 2022, its highest level in nearly eight years.
This unprecedented price level is being stoked by the greatest imbalance between buyer demand and the number of properties available for sale that we have ever measured at this time of year. This is the strongest spring sellers’ market that we have ever seen in several metrics.
Tim Bannister, Rightmove’s Director of Property Data comments: “There’s a hat-trick of reasons for home-owners to follow the normal trend and make it their goal to sell this spring. Firstly, the potential to achieve a record price for their property. Secondly, the imbalance between high buyer demand compared to low available property supply is the greatest that we have ever seen for the start of a spring market, meaning that the chance of being able to pick and choose between several suitable buyers is strong. Thirdly, the proportion of properties finding a buyer within the first week is also at an all-time high for this time of year, so sellers with an appropriately priced and well-presented property can expect a shorter marketing period than the norm.’’
The largest monthly price rise has been recorded in the “top of the ladder” sector, predominantly comprising four bedroom or more properties. This has seen a 3.8% (+£23,619) jump due to high demand and the greatest scarcity of supply, though encouragingly for prospective buyers in this sector 12% more properties have come to market in the last month compared to the same period a year ago. However, it’s the more mass-market “secondstepper” sector that’s selling fastest, with just over half (50.3%) of these homes finding a buyer within the first two weeks of marketing.
“All sectors of the market are experiencing very brisk conditions and we expect the strong market to continue until economic forces combine to move the supply and demand balance closer towards equilibrium. There are headwinds that seem likely to remove the current market froth in the second half of the year. We’ve just seen interest rates rise again, and there are further incremental increases forecast for the year which will raise mortgage rates for some. Inflation and cost of living increases are also likely to affect buyer affordability and market sentiment.
Rightmove says it is too early to know how the property market will be affected by the longer-term economic impact of the war in Ukraine and so all they can use as a measure for now is the level of UK buyer and seller activity. When the war started slightly lower buyer demand was seen but this has now stabilised. Rightmove’s forecast is that overall transaction numbers for 2022 will revert back to pre-pandemic levels, as the market returns to a more even balance.
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Source: Rightmove, Forbes Advisor