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Larger properties are driving UK asking prices to near record highs

Vaseline 2 months ago

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Asking prices rose to near-record levels in April, driven by larger properties. This is evident from data suggesting a continued recovery in the UK housing market, despite recent mortgage rate volatility.

The average asking price of properties coming onto the market rose to £372,324 in the four weeks to mid-April, up just over 1 per cent on the previous month and just £570 lower than the highest level in May last year. highest ever since property portal Rightmove started collecting the data in 2001.

The main driver was the rise in prices of four-bedroom detached homes and larger houses, which recorded a 2.7 per cent increase month-on-month.

“The sector at the top of the ladder continues to drive price activity at the start of the year, with movers in this sector typically less sensitive to higher mortgage rates and holding more shares, adding to their ability to move,” Tim says. Bannister, director of property science innovation at Rightmove.

The data comes against the backdrop of recent volatility in the mortgage market. Mortgage rates peaked in the summer of 2023 but fell sharply late last year.

Since then, disappointing inflation data has led markets to reassess the timing and size of the Bank of England’s rate cuts this year, leading to some mortgage rates rising again since February.

Line chart of annual percentage change, showing that UK property prices have recovered from recent lows

Official data last week showed inflation fell less than expected in March to 3.2 percent, albeit to the lowest level in two and a half years.

The average asking price for homes up to two bedrooms, which Rightmove classifies as starter homes, remained virtually stable month on month at 0.3 percent. In the category of homes with three and non-detached homes with four bedrooms, the asking price increased by 0.9 percent.

Year on year, the average asking price for all property types increased by 1.7 percent, the highest annual figure in 12 months, the portal said.

Rightmove said the number of new properties coming to market has increased by 12 percent annually, with a similar increase in sales agreed. Much of this activity was also at the top end of the residential construction sector.

Kevin Shaw, National Sales Managing Director at property services company Leaders Romans Group, said: “2024 is off to a good start with more property development and more sales.” But he warned that price sensitivity was still an issue and said sellers needed to be realistic and “manage their expectations”.

Rightmove’s house price index is compiled from properties coming onto the market through over 13,000 estate agents listed on the portal.

It tracks prices earlier in the sales process than other indices. For example, the Nationwide Index is based on mortgages approved during the month, while the official house price index tracks the prices of completed transactions.