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Asking prices see smallest February increase on record

We’re heading into the busiest season of the year for home-movers. More people start their search for a new home in spring, and we start seeing more properties listed for sale.

Which means we also usually see average asking prices rise at this time of year, too. This is because new sellers can price their homes for a competitive buyer market.

Our monthly House Price Index has the most up-to-date monthly data on asking prices in England, Scotland and Wales, so we’re able to see what’s happening in the housing market right now. This month, new sellers haven’t been increasing asking prices, so prices have stayed pretty flat. The average asking price of a home in Great Britain is now £362,452, rising by just £14 (+0.0%).

Although this is the smallest increase from January to February that we’ve ever recorded, we see it as an early sign of a more positive housing market for home-movers in the year ahead, as we’re not seeing significant price falls that some were predicting for this year.

Why have house prices remained steady this month?

One of the main drivers of the house price growth we’ve seen over the past two years has been the imbalance of supply and demand, with far more people looking to move than there were homes available for sale.

After two and a half years of a fast-paced housing market, with multiple bidders and cash buyers lining up to buy every home for sale, we’re now heading into a more settled market.

There’s still a shortage of available homes for sale, but the good news is there’s more choice for home-buyers, and less competition than a year ago. The number of available homes for sale is up by 48% on the record low levels of last year.

And in a slower market, buyers have the time and space to make sure they find the right home for them. This is why estate agents are advising home-sellers that setting a realistic asking price when first listing their property is key to finding the right buyer more quickly.

Tim Bannister, our property expert, says: “The big question this month was whether we’d see new sellers increasing their asking prices, which is what we usually see as we approach the spring selling season. This month’s flat average asking price indicates that many sellers are showing restraint when pricing their homes.

“We’re moving into a slower-paced market. Buyers will take longer to find the right home at the right price due to the higher cost of repaying a mortgage,” he adds.

More home-buyers are ready to make a move

Many buyers are ready to get on with their moves. We’ve seen the number of potential buyers making enquiries to estate agents rise by 11% in the last two weeks, compared to the same period in 2019, which is the last time we saw a ‘normal’ housing market.

Average mortgage rates have also fallen after the uncertainty in the months following the mini-budget. The latest data shows that someone looking to take out a five-year fixed mortgage with a 15% deposit would now be looking at an average rate of 4.82%, compared with 5.90% in October.

Tim says: “Estate agents are now reporting they’re increasingly seeing buyers who have more confidence and more choice, albeit with revised budgets to accommodate mortgage rates.”

First-time buyers are returning

There are now more sales being agreed than at the start of the year, and during the months following September’s mini-Budget. First-time buyers were hit hardest by the rapid increase in mortgage rates. But now, those who are in the market and able to move are motivated to agree a purchase. It’s likely this is partly driven by high and increasing rents.

“It’s a positive sign for the housing market to see many first-time buyers getting on with their moves. Average mortgage rates have edged down, but some first-time buyers will unfortunately still be priced out of their original plans. They may need to look for a cheaper property, save a bigger deposit, or factor higher monthly mortgage repayments into their budgets now,” says Tim.


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