Home.co.uk’s Asking Price Index for May reveals a promising step towards recovery in the UK property market, with rising asking prices noted across all English regions, Scotland, and Wales.
This indicates renewed confidence among sellers following the significant correction in prices due to the interest rate shocks.
Although rising stock levels and longer marketing times are to be expected for this time of year, they could serve to temper further price hikes. There is a risk that overly optimistic pricing could lead to a stand-off between buyers and sellers, potentially triggering another price correction and market stall.
However, despite some uncertainty surrounding interest rates, vendors seem to have dismissed the Bank of England’s cautionary messaging, which seemed intended to undermine buyer confidence and promote a climate of hesitancy. This is evident in the remarkable example of seller confidence in the South East during April, where asking prices jumped by 1.6%.
The market in the northern regions of England, as well as in Wales and Scotland, remains robust, with shorter marketing times than pre-pandemic levels. The North East sales market, in particular, has seen remarkable transformation. These regions are showing positive year-on-year home price growth and are predicted to experience the most growth in the future.
In spite of a slight increase, mortgage rates remain extraordinarily low compared to the rate of inflation, which continues to support demand and facilitate the recovery. Fixed-rate deals are still available below 4%, while inflation remains above 10%, preventing a surge of repossessions like those seen in the 1970s when interest rates outstripped inflation.
However, year-on-year growth slipped into negative territory (-0.8%) as the Typical Time on Market for unsold property in England and Wales increased by four days to a median of 81 days. The total sales stock count for England and Wales rose significantly in April by 21,077 to reach 409,559.
Despite this, the Scottish property market is leading the way in terms of annualised regional price growth (5.5%), while London lags behind at -3.0%. Meanwhile, rental prices across the UK continue to rise, with an annualised increase of 12.4% led by Greater London (up 18.7%).
