In the latest data released by online property listing website Rightmove, the average house asking price jumped by the largest increase in ten months to almost £370,000. The £5,279 increase to the average asking price is a significant amount considering the Bank of England’s standard base interest rate has remained steady at 5.25% since September 2023 and inflation has rested at double the target rate at 4.0% in December and January. There is little in the economy to have signaled such a significant increase of buying in the housing market.

Sellers are likely optimistic due to the expectation for the first rate cut since the pandemic to occur in the first half of this year. Also, while the Bank’s rate remained steady, lenders began to lower their rates in February with some dipping below the base rate of 5.25%. 

Rightmove, UK’s largest property listing website, reported the asking price growth for March of 1.5%, which is larger than the highest March increase recording of 1.0%. The feedback from estate agents reflects the optimism of sellers with their increased asking prices as agents reported strong demand from hopeful home buyers.

The official reported average asking price from Rightmove is £368,118. While the jump in the asking price was the highest in ten months, the average was £4,776 below the May 2023 peak.

Activity in the housing market was reported with increased demand last week when Halifax released their average house price as being just £1,800 off the peak which was recorded in June 2022.

With the rise in the average house price as well as asking prices, it is still taking longer for home sellers to find buyers. The average length of time for a house to come on the market before it finds a buyer is 71 days which is the longest time period since 2019. The average delay is being blamed on stronger demand for homes that are attractively priced and selling quickly averaged in with overpriced properties sitting on the market much longer and dragging down the average time period.

According to Rightmove, the number of agreed upon sales in the housing market is 13% higher than in March 2023. The strongest increase in the annual comparison was recorded in London. Properties in the capital are being sought in higher demand as workers return to the office and as they are helped along with wage increases. 

Though lenders began to lower their mortgage offers last month, with some below the Bank’s base rate, many low rate mortgage offers have been pulled. The reason is likely the upcoming report on inflation and the MPC meeting which will both be this week, Wednesday and Thursday respectively. Rightmove reported the average five-year mortgage is 4.84% and though higher than the week prior when the average was 4.64%, it is still below base rate which makes mortgages cheaper than would have been expected.

Also, if the MPC does get favorable inflation reports this month and in the coming months, a cut to the standard base rate is expected, but will likely be small and possibly at 0.25% or 0.50%. The cuts would put the base rate at 5.0% or 4.75%, which is still above the current average mortgage rate. 

Due to the fact the move to lower rates was under the direction of competitive lenders building demand in borrowing, the current attractive rate deals could disappear quickly. This is likely why homebuyers have been motivated to purchase while deals are cheaper than what would have been expected for the first quarter of 2024.

Timothy Bannister, Director of Property Science Innovation at Rightmove, remarked, “It’s been a positive first three months of the year for the market and better than many anticipated. However, we know from last year how quickly the picture can change.

“Sellers are right to feel more confident and optimistic this year, but buyer affordability remains stretched and higher mortgage rates are an ongoing challenge. With the market still sensitive to pricing and external events, some caution and willingness to negotiate is advised.”