Housing Market Update By Ummar Hanif

Headline Facts:

  1. Average UK property prices have increased by 0.2% to £366,247 in the month of April.
  2. The annual rate of increase was a modest 1.2%
  3. Value of first-time buyer homes hits record high
  4. The market has also seen sellers lowering their expectations to reflect economic reality

UKDC has seen that, despite economic and political turbulence, the UK’s property market has performed well in April, which we believe in part was down to the stabilising of mortgage rates and more realistic pricing by agents and vendors.

The average price of property listed by UK estate agents in April increased by 0.2% – or £890 – compared to the previous month, as traditionally more people put their houses up on the market at Spring time. 

The rise is notably less than the 1.2% typically seen at this time of year, and marks a smaller monthly rise than the 0.8% recorded in March. However, it says sellers are pricing realistically to tempt seasonal buyers.

Rises have been recorded in all regions across the UK this month, with the exception of London and the North East which have seen falls of 0.5% and 0.1% respectively. Scotland posted the biggest monthly rise at 3.2%.

The average cost of a UK home currently listed for sale now stands at £366,247, which is 1.7% higher than last year.

While the general rate of growth is slowing, average values of typical first-time-buyer homes (which are defined as two bedrooms or fewer) hit a new record high of £224,963 in April. 

We believe that rocketing rents was a key motivator – for those able to clear the mortgage and deposit hurdles – to get onto the property ladder.

Mortgage costs have also stabilised from their peak of more than 6.5% following last autumn’s Budget announcements. The average cost of a ‘first-time buyer’ 5-year fixed rate mortgage with a 15% deposit now stands at 4.46%. 

However, while costs have continued to edge down, the average rate for this kind of deal stood at 2.64% this time last year which represents a significant increase.

The number of sales being agreed in April suggests a healthier market than many expected. Levels are just 1% under the pre-Covid figures for March 2019, and above those seen in September before they plummeted by 21% following the Budget.

However, at 18% behind last year, agreed sales are consistent with more normal levels of market activity.

Agents have also been reporting that many sellers have transitioned out of the frenzied multi-bid market mindset of recent years and understand the new need to tempt spring buyers with a competitive price which has been reflected in the current market conditions. 

The good news is that buyers and sellers appear to have adapted to and accepted the current economic and property market conditions. 

This means that there are now more attractive fixed rate mortgages available providing buyers with more confidence, and there has been a noticeable increase in sales activity which in turn has seen the markets moving again.