UK home asking prices rise as mortgage relief spurs activity

UK HOME SELLERS increased their asking prices for a second month amid further signs the property market is building momentum after its worst year since the financial crisis.

The average price of a property put up for sale rose 0.9% to £362,839 ($456,400) in February with gains across all UK regions including London, according to real estate portal Rightmove. It left prices 0.1% higher than a year earlier, the first positive annual reading since July 2023.

Agreed sales in the first six weeks of this year were 16% higher than the same period last year, while new listings and buyer enquiries were both up 7%.

The figures published on Monday appear to confirm a housing market returning to health as cheaper borrowing costs and a brighter economic outlook lure buyers back into the market. Official data last week showed prices increased for the first time in four months in December, while more forward-looking data from lenders Halifax and Nationwide indicated further gains in January.

There’s scope for “cautious optimism as we settle into 2024, with encouraging activity levels and a more stable housing market,” said Rightmove Director of Property Science Tim Bannister. Prospective buyers who can afford to do so have “acted fast and demonstrated their belief that 2024 is their year to get moving.”

Home sellers were most bullish in Scotland, where the average asking price rose 5.9% on the month. In London, they climbed by 2.8% to £682,989, and no region of the country saw prices decline.

Still, the market remains very price-sensitive, with overpriced homes “left on the shelf.” Buyers now have a greater choice of property for sale and borrowing costs remain “elevated,” Rightmove said.

While mortgage rates have fallen from 15-year highs last summer, they are still well above levels before the Bank of England began its hiking cycle and have started to edge up again this month. According to Moneyfacts, the average 2-year fixed residential home loan is around 5.7%.

Motivated sellers need to be realistic about valuations, said Kate Eales, deputy head of residential at agency Strutt & Parker. “Buyers’ budgets are still being largely constrained by expensive mortgage products, so it’s a careful balance.”