UK housing market hots up with strong jump in asking prices
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The UK property market was more resilient than estate agents and economists expected in 2023 despite the surge in borrowing costs.
PHOTO: REUTERS
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LONDON - The price of United Kingdom homes coming to market jumped by the most in eight months in January after a post-Christmas stampede by potential buyers, according to Rightmove.
The online property portal said that the asking prices sought by sellers rose 1.3 per cent to an average of £359,748 (S$611,000). It also recorded nine of its 10 busiest days for buyers securing an agreement in principle for a mortgage.
The figures suggest the market that defied forecasts for a crash in 2023 is starting 2024 on a stronger footing as a price war in the mortgage market drives down interest rates for borrowers and speculation mounts that the Bank of England will cut its key lending rate.
“Many are taking action to make their move in 2024, perhaps including some who paused last year due to the more unsteady mortgage market,” Mr Tim Bannister, director of property science at Rightmove, said on Jan 15. “The data at the start of 2024 points to building momentum and reasons for growing market optimism.”
Asking prices have stagnated over the past year, falling by 0.7 per cent, according to Rightmove’s measure, and transactions have slowed sharply. But the market has shrugged off predictions for a drop in prices of 10 per cent or more.
Rightmove said January marked the strongest start to a year since 2020, with the increase in asking prices exceeding its long-term average of 0.6 per cent.
While the Bank of England’s base rate remains at the highest level since 2008, lenders are clambering for customers, reducing the margin they take on mortgages and reviving confidence among buyers.
Cheaper mortgages are being driven by expectations that policymakers will shift towards cutting rates as soon as May after recent falls in inflation. Currently, markets are leaning towards a total of five quarter-point cuts by the end of 2024.
Rightmove said that buyer demand in the first week of 2024 was up 5 per cent on last year. Meanwhile, the number of new properties coming onto the market is 15 per cent higher than the same period a year ago.
The average five-year mortgage rate has tumbled to 4.86 per cent, down from a peak of 6.11 per cent last summer, Rightmove said.
The property market was more resilient than estate agents and economists expected in 2023 despite the surge in borrowing costs. House prices fell 1.8 per cent under Nationwide Building Society’s indicator in 2023 but were up 1.7 per cent under rival lender Halifax’s.
Real estate agent Knight Frank announced on Jan 15 it expects house prices to rebound in 2024 after the cooling in mortgage rates.
It predicted a 3 per cent rise in values in 2024, an upgrade from the 4 per cent fall forecast in October. “With low-level single-digit growth in subsequent years, we expect cumulative growth of 20.5 per cent in the five years to 2028.” BLOOMBERG
