Although there are sunny spells, and temperatures haven't started to soar, there are signs of spring everywhere in London. Magnolia and cherry trees are in blossom, the clocks went ahead, and Easter is only a few days away. How did the change in season affect the residential property prices? See below our latest update from Rightmove:
+0.8% Monthly asking price change, just below the 20-year norm
+3.0% Annual price growth
+6% Increase in buyer demand versus the same period in 2019
Cautious recovery continues but larger-home sales lag behind.
• This month, the average price of new homes rises by 0.8% (+£2,906), primarily as a result of a 1.2% increase in the largest housing sector (top of the ladder):
• Notwithstanding economic turbulence, the market gradually advances towards pre-pandemic activity levels, with the new seller asking prices at £5,800 below the peak seen in October.
• As we move into the spring market, typical first-time buyer properties (those with two bedrooms or fewer) are leading the recovery:
• Sales agreed in this sector are surprisingly recovering fastest, and in the last two weeks are just 4% behind the same period in the more normal market of 2019, though 18% behind the exceptional 2022.
• Average newly marketed prices for this type of home are now just £500 lower than their record last year.
• The typical first-time buyer residences (those with two bedrooms or fewer) are driving the rebound as we enter the spring market:
• Surprisingly, sales signed in this industry are returning the fastest; in the last two weeks, they are just 4% behind the same period in the more typical 2019 market, but 18% behind the unusual 2022.
• The typical newly listed prices for this kind of home are currently only £500 less than their record from the previous year.
Overview
This month, the average price of new homes on the market increased by 0.8% (+2,906) to £365,357.
This is lower than the average monthly increase of 1.0% recorded in March over the past 20 years, which reflects a higher level of pricing conservatism than is often seen at this time of year on the part of many new vendors.
This caution is only warranted by a 1.2% monthly price increase in the larger home top-of-the-ladder sector, as opposed to relatively modest increases of 0.4% and 0.5% in the first-time buyer and second-stepper sectors, respectively.
The average new seller asking price is currently £5,800 less than the high price from October 2022, and the annual price growth is presently at +3.0%.
The information keeps pointing to a market that is considerably steadier than many had anticipated and is gradually returning to the activity levels of the more typical market for 2019.
The modest rebound is being led by typical first-time buyer types of residences (two bedrooms and fewer), with sales agreed in this sector recovering the fastest.
Just 4% of negotiated deals in the past two weeks have lagged behind the same period in the 2019 market's more typical market.
To put this in perspective, they are 18% below the extraordinary level from the previous year.
Because of the increasing buyer activity, average asking prices for homes geared towards first-time buyers are currently only £500 below their peak from last year.
With the growing cost of living and the higher cost of securing a mortgage, it is likely that many members of this generation receive some financial assistance from family members or were able to avoid paying record rent and accumulate a larger deposit by residing with parents for a longer period of time.
Sales approved in the last two weeks in the more discretionary top-of-the-ladder and second-stepper housing sectors are 10% and 13% behind the same period in 2019, respectively, highlighting the current hyper-local and market sector discrepancies.
The 1.2% increase in the most expensive property sector, however, appears to be overly optimistic given the slower recovery in sales agreed on numbers, and some sellers in this sector may need to temper their price expectations in order to attract more buyer interest and secure a sale.
However, the modest 0.4% increase in average second-stepper asking prices reflects this more subdued level of activity.
A decline in lifestyle changes brought on by pandemics is one reason why larger home sales are declining.
The percentage of purchasers making inquiries to move more than 50 kilometres from where they currently reside is now 15%, unchanged from 2019, and below its epidemic peak of 18%.
Agents View
“While the London market hasn’t performed as strongly as the rest of the UK during the pandemic market boom, momentum is building and while asking prices are still a little off the pace for this time of year, we’ve seen a strong and consistent level of buyer demand so far in 2023.
This is down to the reversal of the pandemic-inspired exodus of London buyers looking beyond the capital for larger, more affordable homes.
This reversal has been driven by a return to normality, both socially and within the workplace, with many buyers now keen to return to the convenience that London living provides.
Of course, while the current economic picture is far better than many predicted, the high cost of homeownership along with the increased cost of borrowing is still having an influence on where this interest is currently being focused.”
Affordability Trends
The average asking price of a typical first-time buyer home (two bedrooms or fewer) using the Rightmove Home Price Index, and the average monthly mortgage payment for first-time buyers are used to calculate this payment.
The same kinds of properties are used to compute the equivalent monthly rent (two bedrooms or fewer).
The average limit that a person can borrow from a lender is 4.5 times the Average Weekly Earnings (AWE) information from ONS, which is used to determine the affordability to purchase a first house.
The Rightmove Home Price Index is used to determine the typical first-time buyer home's average asking price.
If you are looking for professional advice on how much your property could be worth on the current market, book a free valuation, or a no-obligation consultation with one of our property experts by clicking here >>> BOOK A VALUATION. Alternatively, you can also contact us at 020 7723 5645 or pop into one of our local Fraser & Co offices for a friendly chat.
Source:
Rightmove.co.uk-
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