According to the latest Asking Price Index from Home.co.uk for May, UK home prices have shown a slight increase of 0.4% despite a surge in property listings, which has intensified competition among sellers.
This growth is modest compared to the previous year, with the annualised mix-adjusted average asking price growth across England and Wales also recording a marginal rise of 0.4%.
The market initially anticipated a cut in the Bank of England base rate following a sharp decline in inflation, prompting an influx of potential vendors. However, the reality of steadily rising mortgage costs, fuelled by market pessimism about inflation, has tempered the market’s recovery. This has led to a stockpile of properties, with May’s figures showing the highest unsold sales stock since November 2018.
The surge in property listings, which rose by 7% from April last year, appears to be driven more by optimism for future rate cuts rather than current market demand. As a result, properties are staying on the market longer, with the average time on market for unsold property increasing by eight days compared to May 2023.
Geographically, vendors in regions like the North East, Yorkshire, and Scotland are showing resilience, with these areas witnessing more robust price growth compared to the southern regions of England. In contrast, the South faces more pressure, with negative year-on-year growth prompting some vendors to adjust their asking prices.
On the rentals front, the market presents a mixed picture. While asking rents in the UK have risen by 3.4% since May 2023, Greater London continues to experience a decline, although at a slower rate of -3.2%. Notably, boroughs such as Islington are seeing significant rebounds in rental prices.
