Matthew Henderson
Associate Director, Residential Research
Spring appears to have sprung in the housing market in recent weeks. Our figures show that buyer appetite, sales instructions and exchanges, as well as other measures of housing market activity, have all picked up. This sets the scene for a busy spring season.
Asking prices have also risen, fuelled by momentum at the higher end of the housing market. The average price tag of a home put up for sale climbed by 1.1% (£4,207) in April to £372,324, just shy of the record in May 2023, according to Rightmove.
Guy Robinson, our Head of Residential Agency, explains: “All of our housing market metrics are up post-Easter. We have seen a seasonal shift in the last few weeks, slightly earlier than expected.
“People have been waiting for interest rates to drop in late spring or summer. However, with inflation falling at a slower rate than hoped, some have pushed back expectations of when the Bank Rate will be cut. There is a sense now that people just want to get on rather than delay a move further.
“People now know where mortgage rates will land, likely at around 3-4%. Despite lenders increasing rates in the last couple of days, buyers still have access to reasonable mortgage rates in the knowledge they’re not about to reduce dramatically, or suddenly spike. House prices have not tumbled. We have a steady, robust housing market with green shoots.”
Buyer appetite increases
The number of buyers registering with us rose by 9.3% in March, ahead of the Easter weekend, as the spring season got under way, according to our figures. This continues an upward trend, with buyer demand in the first three months of this year up by 50.4% compared with the last quarter of 2023.
This trend chimes with RICS’s closely-monitored monthly residential survey, which reveals that buyer appetite continued to grow in March. Its ‘temperature check’ of demand was the most positive since February 2022.
With a growing pool of buyers eyeing homes, there is a clear opportunity for sellers to gain traction before the summer holidays and the prospect of a general election in the autumn.
Supply of homes for sale climbs
At the same time, there’s been an uptick in the volume of sales instructions, paving the way for an influx of homes to hit the market in the weeks and months ahead. Momentum has been building, with sales instructions across our offices in the first three months of this year 46.2% higher than the last quarter of 2023.
In March, the number of sellers instructing Strutt & Parker picked up by 43.9%. There was a noticeable spike in London, where sales instructions jumped by 69.4%, and an uptick in the number of instructions signals an impending influx of sales stock.
Rightmove paints a similar picture of homeowners ‘springing into action’ in the run-up to the Easter bank holiday weekend. Thursday 28 March saw the highest number of sellers coming to the market in one day so far this year, with 45% more homes added to the portal than the previous Thursday. It was also the third biggest day for new listings since August 2020.
Its latest data for April reveals that the sale of larger family homes is driving activity. The number of sellers at the higher end of the housing market is up by 18% compared with this time last year - and the volume of sales agreed is up by 20%.
Robinson explains: “If you’re thinking of bringing your home to the market, you ideally want to give yourself a two- to three-month period to do it. Mid-March to July is a good window to sell. But with a busy season looking likely, it’s worth getting ahead.
He adds: “The upcoming election isn’t likely to promote a dramatic change in the housing market. The reality is that people have already factored it in. But some people will sit on their hands. Now is the window to sell before the general election could dampen activity.”
Sales figures rise
The housing market rebound extends to sales crossing the line. Not only is there an increase in buyers making offers, but this is translating into more agreed sales too. This bodes well for both buyers and sellers alike.
While offers we received were up 13.1% in the first quarter of this year against the final quarter of last year, it was March that showed real acceleration. The number of offers accepted in this month was up 29.7%, according to our figures. Meanwhile the number of exchanges was 25% higher than in February, rising to 42.9% outside London .
Robinson says that the number of offers accepted, coupled with a decline in the number of sales falling through points to increased buyer confidence as well as a healthy market.
He explains: “There was limited activity in the housing market last year. While buyer numbers are still relatively low, those that are looking are serious and are transacting.”
RICS echoes the sunnier outlook, with surveyors forecasting an improvement in sales volumes in the months ahead.
“With the inflation backdrop turning a little less difficult of late, this has led to expectations that the Bank of England will be able to start lowering interest rates later in the year. This should continue to support the market to a certain degree going forward,” Tarrant Parsons, senior economist at RICS, explained earlier this month*.
“In keeping with this, near-term sales expectations point to an improving outlook, albeit the scope for an acceleration in activity will still be relatively limited given mortgage rates are set to remain much higher than in 2020/21.”
* Thursday 11 April 2024