In March, the average home sold in Great Britain was on the market for 48 days, taking 22 days longer to sell than the same month last year, according to Hamptons’ April Market Watch
The research conducted by the lettings and estate agent found that, across Great Britain, 11% of new instructions in March had an offer accepted within a week, slightly down from 12% in March 2022.
However, well-priced and future-proofed homes continued to sell at a similar pace – or even slightly quicker than last year – particularly at the top end, where buyers were often cash-rich and likely to stay in that home for longer.
Of all properties priced at £1m or more that came onto the market last month, one in 10 sold within a week. This was up from 8% in March 2022, and was the second highest proportion of any March since Hamptons’ records began in 2009.
Rising mortgage rates led to more homes being sold after being reduced – this peaked in February, when half of homes that changed hands in the UK had undergone a price cut of at least £1.
As the year has progressed, a rising share of homes being sold came onto the market this year rather than in 2022 – 40% of homes sold last month were put on the market last year, down from 55% in February.
As a result, the proportion of homes sold following a price reduction decreased slightly in March to 48%.
In March 2022, the average seller in England and Wales achieved a near-record of 101.0% of their asking price.
This fell to 98.8% last month; however, the continued lack of homes coming onto the market meant sellers were still achieving closer to their asking price than in any March before 2021.
While house price growth continued to slow, the data showed that rents kept moving in the opposite direction.
Tenants had a little more choice than they did last year, reflected in a 10% increase in the number of tenants moving home.
However, the number of rental homes on the market settled at nearly two-thirds below pre-pandemic levels.
Rental growth across Great Britain in March posted its third ever double-digit increase since the Hamptons Lettings Index began in February 2014.
Double-digit rental growth was only recorded in May 2022, February 2023, and now March 2023.
In March, the average rent for a newly let home reached £1,236 per month. This was 10.8% – or £121 per month – higher than the same month last year. March saw the second fastest increase posted in any month after the 11.5% increase in May 2022.
Rental growth continued to be led by the capital, with average London rents rising 16.2% faster than anywhere else in the country.
Inner London rents rose 18.5% over the past year, to reach £3,046, surpassing the £3,000 mark for just the second month running. Meanwhile, the 15.6% growth in Outer London marked the fastest annual increase on record and took average rents to £2,013 per month.
The number of homes on the rental market was 13% above last year’s record lows, but there were still 64% fewer homes available to rent across Great Britain than in March 2019.
Despite the economic challenges, Hamptons’ research found that first-time buyers accounted for a record 27.1% of all buyers in Great Britain so far this year, recovering from a dip late last year when mortgage rates peaked, but following the upward trend in numbers over the past decade.
However, as higher mortgage costs continued to shape the market, first-time buyers adapted by buying smaller, cheaper properties.
The average first-time buyer reduced their budget by nearly £12,000 compared with last year, a significant shift given the increase in average house price.
2023 also marked the first time in over a decade whereby most first-time buyers purchased one and two-bed homes, rather than larger properties. The average first-time buyer bought a home with an average of 2.4 bedrooms – the smallest home since 2010 when the lack of funding post-Credit Crunch made it difficult for first-time buyers, particularly those with small deposits, to borrow money.
In London, where proportionally first-time buyer purchases reached a record high so far this year, the average buyer downsized from a 2.4 bedroom property in 2022 to a 2.0 bedroom property in 2023. Mortgage repayments tended to take up a higher chunk of London buyers’ earnings compared with anywhere else in the country.
Hamptons reported that strong rental growth and wider inflation has eroded many renters’ ability to save, meaning those with the funds were choosing to buy now rather than waiting to save up a bigger deposit to afford the home they potentially could have bought last year.
Hamptons predicted that this was likely to put a floor under prices for smaller homes, particularly flats.
Aneisha Beveridge, head of research at Hamptons, said: “Downsizing, in various different forms, is a big trend in the housing market at the moment, driven by the rising cost of living and higher interest rates.
“First, our research has identified an increase in older homeowners selling their properties this year after owning them for at least two decades.
“These vendors, many of whom have benefitted from strong capital growth, are likely to be selling up to move to a smaller, cheaper home in a bid to reduce their outgoings amid increased energy and living costs.
“Higher interest rates mean first-time buyers are downsizing too.
“Contrary to expectations, these buyers are still very active in the market but are adapting to the new, higher-cost conditions by purchasing smaller, cheaper properties.”
