Average new-seller asking prices rose 0.9% in January
The latest housing market data from Rightmove has shown a rebound in asking prices, injecting a sense of optimism into the market not seen recent months.
However, there are some caveats: asking prices differ from sale prices, which may disappoint.
Still, the data paints a more positive picture than seen toward the end of 2022, and it may indicate a softer landing for house prices than previously predicted.
Snapshot of a possible recovery in UK house prices
Average new-seller asking prices rose by 0.9% to £362,438 in January, representing the largest rise at this time of year since 2020, according to statistics collected by property portal Rightmove.
Andrew Montlake (pictured), managing director of Coreco, said that there are a few interesting nuances to take away from the data. Firstly, it shows an immediate snapshot in time that the market has started brighter than many expected.
“There is usually a bounce in activity at this time of year as many potential buyers actually have time to think over the Christmas break and vow to have moved by next Christmas or, sadly, vow to not have to spend another Christmas together,” Montlake added.
He believes the real test will be whether this initial bounce of activity is sustained and translates into actual sales.
What we can optimistically gauge from this, Montlake said, is that demand for property is still alive and well, and that higher interest rates are no longer putting off people from looking.
“I expect this will continue and the market, though undoubtedly slower than last year, will continue to confound doom-mongers yet again predicting any kind of crash,” he said.
House price statistics: wait and see
Nick Morrey, technical director at Coreco, said property search engines record asking prices not agreed prices, so he believes the Rightmove data shows people could be asking more for their properties but accepting less, or accepting close offers.
“Unfortunately, we will not see those figures until lenders such as Halifax or Nationwide produce them in a few months’ time. We could also wait for Land Registry to produce figures, but they are based on completions, which might not start coming through until April,” he added.
Morrey believes sentiment amongst sellers is a little out of date, and said quite a few sellers listing currently likely held off the actual marketing commencement from October, November and December to let the instability caused by the Kwasi Kwarteng mini-Budget settle down and get Christmas out of the way.
So, although some statistics might lead to slightly inaccurate conclusions, Morrey said it is a positive sign that there is demand out there and supply has not dried up.
Why the second half of 2023 is looking more rosy
Montlake said any changes in price levels will be regionalised in an increasingly likely relatively soft correction as the pandemic froth, exacerbated by the stamp duty holiday, comes off.
“Much of this has already happened as far as asking prices are concerned. Perhaps it is why we saw a little bump-up in the last set of statistics, so I suspect on average we may well see levelling off over the year with an overall fall of 5%,” Montlake said.
Once you factor in expected falls in energy costs, inflation and mortgage rates, Montlake said the second half of the year looks more rosy, with a fair share of cautious optimism as stability returns to the housing market.
In fact, he believes 2023 looks like it could well be the year to buy property in the UK as slightly lower prices and more realistic interest rates mean that those who do manage to buy this year will look back in a few years’ time with a smug grin.
Even though interest rates are falling, so affordability is improving, Morrey said it is still a fact that rates are roughly treble what they were just over a year ago and the cost-of-living crisis is still very much evident.
“People do still want to move, so we expect prices of good properties in good locations to outperform the averages, but expectations are still for the market to stagnate or reduce slightly during 2023,” he said.
What are you expecting from house prices over 2023? Let us know in the comments below.
