Average asking prices for U.K. properties have hit £367,501 (US$462,114) this month, a 2.1% (£7,400) month-over-month increase, a 10.2% year-over-year increase, and the fourth consecutive month in which prices have hit a record high, according to a report Monday by property search site Rightmove.
Average asking prices are now £55,000 higher than they were two years ago, according to Rightmove, compared to an increase of just £6,000 in the two years prior to the Covid-19 pandemic. Average asking prices for “top-of-the-ladder” properties (defined as five-bedroom and above properties, as well as four-bedroom detached houses) are now £680,938, a 3.9% month-to-month increase and an 11.9% year-over-year increase. (These numbers exclude prices from inner London.)
“People may be wondering why the housing market is seemingly running in the opposite direction to the wider economy at the moment,” Rightmove director of property science Tim Bannister wrote in the report. “The imbalance between supply and demand is supporting rising prices. Though demand is softening from the heady levels we saw this time last year, the number of buyers enquiring is still significantly higher than during the last ‘normal’ market of 2019, while the number of homes for them to choose from remains more constrained.”
The market is showing slight signs of easing, however. The number of agreed sales are up 12% year-to-date compared to pre-pandemic 2019 levels, but are down 17% compared to 2021. Similarly, the number of buyers contacting agents this month was 31% higher than 2019 levels, but 14% below 2021 levels.
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“We anticipate that the effects of the increased cost of living and rising interest rates will filter through to the market later in the year, and a combination of more supply of homes and people weighing up what they can afford will help to moderate the market,” Mr. Bannister said.
Still, the number of available properties this month is down 16% year-over-year and 55% compared to 2019, meaning that the balance of supply versus demand is likely to remain lopsided.
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“Market activity at present is determined more by a shortage of stock than a softening in demand despite recent sharp increases in the cost of living and especially interest rates,” Jeremy Leaf, a north London estate agent and former RICS residential chairman, said in an emailed statement.
Regionally, Wales and South West England saw the largest annual jumps in asking prices, with increases of 14.5% and 13.4%, respectively.
In London, Westminster prices increased just 1% month-to-month but 11.7% year-over-year, up to an average of £1.45 million, the largest increase in any London borough. Asking prices in Kensington and Chelsea dropped 2.2% month-to-month but increased by 7.7% year-over-year, and remain the city’s most expensive with an average asking price of £1.69 million in May. The third most expensive borough was Camden, with an average asking price of £1 million.