According to Rightmove’s house price index, the 1.8 per cent monthly price growth was also the biggest seen so far this year, and higher than the one per cent growth typically seen during May. This represented a £6,647 increase in the average asking price.
Annually, asking prices were 1.5 per cent up on this time last year.
Tim Bannister, director of property science at Rightmove, said: “This month’s strong jump in new seller asking prices looks like a belated reaction and a sign of increasing confidence from sellers, as we’d usually see such a big monthly increase earlier in the spring season.”
He said one reason for this rise in confidence was that predictions for a major downturn in the market were looking “increasingly unlikely”.
Bannister said: “What is much more likely is that the market will continue to transition to a more normal activity level this year following the exceptional activity of the pandemic years.”
Peter Beaumont, CEO at TML, said: “It’s no secret that house prices have been volatile over the course of the year, and while prices have risen according to Rightmove, it’s too soon to tell whether this trend will hold. However, as spring begins in earnest, buds of optimism are beginning to sprout within the market.”
Sustained buyer demand
The firm indicated that activity in the market was healthy, with agreed sales numbers just three per cent down on pre-pandemic levels and buyer demand three per cent higher.
Rightmove said first-time buyers and second-time buyers were driving most of the activity, with demand now three per cent and six per cent higher than in 2019 respectively.
It said buyers at the top of the ladder, who typically buy larger homes, were displaying signs of “over-optimism”, as prices at this level rose the fastest despite a one per cent drop in buyer demand when compared to 2019.
By comparison, first-time buyer homes saw a 0.6 per cent monthly rise in average asking prices to £226,399, while second-stepper homes rose 0.7 per cent to £341,567. Meanwhile, top-of-the-ladder property asking prices jumped by 2.8 per cent since last month to £685,068.
Annually, these represented rises of 1.5 per cent for first-time buyer homes, 1.3 per cent for second-stepper homes and 0.6 per cent for top-of-the-ladder homes.
Bannister added: “The market is still very price-sensitive, and it is important that new sellers do not damage their prospects of a sale by overpricing initially and reducing later, with agents reporting that it’s the realistically priced new instructions that are selling best.”
Rightmove’s data showed that the average discount from final asking price to agreed sale price was 3.1 per cent, in line with pre-pandemic levels.
Average sale times
Rightmove said homes at the top of the ladder were selling faster than in 2019, at an average of 67 days. However, it noted that this was slower than the 35-day average last year and was the biggest increase in time compared to other property types.
Second-stepper homes are now taking 52 days on average to sell, compared to 28 days in 2022, and first-time buyer homes are taking 53 days, up from 35 days last year.
The average number of properties held on estate agent books rose slightly from 45 in April to 47 in May.
Bannister said: “More discretionary sellers at the top-end may be prepared to price high and wait for the right buyer, and whilst it is positive that they appear to feel no financial pressure to sell, the data suggests that some sellers in this sector will need to price more competitively if they want to find a buyer in the current market.
“A more stable mortgage market is good news, and after a period of rapid rate rises followed by some significant falls this year, this period of relative stability will help homemovers to plan ahead.”
Tomer Aboody, director of MT Finance, said: “With possibly the final base rate increase on the horizon and some positive noises coming from the government, it will be interesting to see how the market further adjusts and whether it continues to defy expectations in coming months.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “These are, of course, only asking or aspirational prices, not prices paid but do reflect what we have also been seeing in our offices – now that inflation and interest rates seem to be at or approaching their peak buyers are slowly returning with added confidence making it feel like a more normal spring market.
“However, without the intense competition for property that we saw 12 months ago, those not relying on mortgages or who are equity rich from Covid are very much to the fore but don’t want to be rushed before taking the plunge.
“The reasons for moving in many cases haven’t disappeared even though the race for space may be run. Looking forward, we don’t see any particularly significant changes other than supply and demand continuing to balance out.”
