Strong demand from home movers at the beginning of the year has led to the average asking price of a newly-marketed property jumping by 1.5% in March, according to research from Rightmove.
New records show that the first-time buyer (FTB) and second-stepper sectors have hit all-time asking price highs of £189,840 and £272,031 respectively, while overall average asking prices also hit a new record in four out of 11 regions.
This month’s 1.5% increase – equivalent to £4,503 – has been amplified by a dip in the number of sellers coming to the market, increasing the disparity between demand and supply in some market sectors and regions.
“Many buyers entering the traditionally busy spring market this year face paying more than ever for their target property and having a more limited choice,” Miles Shipside, Rightmove director and housing market analyst, said. “There is also upwards price pressure in the lower and middle market sectors with both first-time buyer and second-stepper properties at new national record price highs.”
According to Shipside, Rightmove’s traffic hit its highest ever levels in the first two months of 2018, with the demand now feeding through to fuel the substantial £4,503 jump in average new seller and asking prices in March.
This increase is the largest seen at this time of the year since 2007. However, with January and February price rises having been subdued this year, there may be a catch-up element supplementing the rise.
The average price of property coming to the market over the first quarter of 2018 is up by 3.0%, a better performance than Q3 2017 (+1.9%) but weaker than the 3.6% rise in 2016 when homeowners rushed to beat the stamp duty deadline on second homes.
Shipside added: “Sellers need to be mindful of increasingly stretched buyer affordability, and the more they increase prices the more buyers will hit their ceiling on the amount they are able to save for a deposit and borrow for a mortgage.”
“There does, however, still seem to be potential price headroom in parts of the country, especially in some of the regions in the north, and in the more mass-market sectors. However, sooner or later higher prices tend to mean fewer people can afford to move, and that is one of the factors keeping the annual rate of increase subdued at 2.1%.”
The East and West Midlands have experienced average newly-marketed properties reaching an all-time high, along with the North West and Wales. Prices for FTB properties (two bedrooms or fewer) are now 0.5% than their previous high recorded in June 2017, while second-stepper properties (three or four properties) are now 0.9% higher than their previous high seen in October 2017.
These figures also align with a decrease in supply as the market enters a traditionally busy phase. Rightmove measured 112,693 properties coming to the market in the last month, down by 5.2% on the same period a year ago. It’s believed that some of this drop is due to the heavy snow delaying agents and sellers from bringing properties on the market.
“Ironically, a sense of urgency to buy is also present from the speculation that another interest rate rise from the Bank of England is on the cards soon,” said Shipside. “Buyers who apply for a mortgage before interest rate rise should be able to borrow more cheaply.”