National asking prices rose 0.8% in April, a smaller-than-usual increase for the time of year, while the number of agreed sales was 3% lower than this time last year.
Colleen Babcock, mortgage expert at Rightmove, said the market was weathering the storm better than expected, despite the Iran war hitting mortgage rates and causing sticky inflation.
She said: “Some buyers will be feeling cautious due to cost of living and mortgage rate increases.
“However, the latest data shows that, at least for now, homemovers are largely showing their usual resilience, with their housing needs trumping other events. While higher mortgage rates negatively affect affordability, many buyers are also benefitting from rising wages, house prices and more flexible borrowing criteria than in recent years, which all help affordability. Rightmove’s whole-of-market real-time data highlights that while some metrics are understandably slightly down, the overall market currently remains resilient.”
Buyer demand was down 7% on this time last year, which Rightmove said is consistent with recent trends.
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Regional differences
Scotland is proving particularly resilient, with a 4.3% price increase this month, compared to smaller gains in higher-priced regions. Babcock said lower average asking prices – and therefore lower mortgage borrowing – and a faster home buying process are supporting larger price increases in Scotland.
In London, house prices declined 0.1% month-on-month, while in the South East, they were up 1.3%. Wales and the South West saw stronger gains, with house prices up 3% and 3.2% respectively month-on-month.
Peter Ryder, managing director at Thorntons Property Services, said: “The property market across the East of Scotland and Inverness continues to show resilience despite wider economic uncertainty. Increased stock levels are giving buyers more choice and easing the intense competition of recent years, helping create a more balanced and sustainable market. Well-priced, well-presented homes are still attracting strong interest, and activity is being driven by genuine housing needs rather than speculation, providing stability for both buyers and sellers.”
Meanwhile, Marc von Grundherr, director of Benham and Reeves, said London is “fairly measured” and takes longer to respond to improving conditions.
“The combination of heightened geopolitical uncertainty and the increase in mortgage rates has understandably caused some buyers to pause for thought, particularly across the higher end of the market where affordability is already stretched. However, what we’ve seen is not a collapse in confidence, but a more cautious and considered approach from both buyers and sellers,” he added.
Jeremy Leaf, North London estate agent and a former Royal Institution of Chartered Surveyors (RICS) residential chair, said the negative impact from the war in the Middle East was having a limited impact at present, “with the overwhelming majority of sales proceeding, as well as new listings and buyer enquiries steady”.
“On the other hand, the amount of choice of some property means prices remain flat and transaction times are lengthening. We have been involved in some fairly intense negotiations too, with existing as well as new buyers and sellers trying to factor in anticipated increases in costs.
“Looking forward, we don’t expect much to change at least until the beginning of the end of the uncertainty is in sight, although even then, the aftereffects will inevitably linger,” he said.
Mortgage rises add costs
Rightmove’s mortgage data shows that the average two-year fixed rate has risen to 5.42% from 4.25% before the start of the war, adding a monthly average of around £235 to a typical new mortgage.
However, buyer affordability has been helped by a rise in earnings, and with asking prices down on last year, it is helping the market to hold up.
A typical mover is also now able to borrow more due to last year’s review of mortgage lending limits, Rightmove said. Buyer demand has held up the strongest in the most mortgage-reliant, typical first-time buyer sector, where it is down 6% compared to the average of 7%.
