Inflation: UK house asking prices escalated this month

Research from the UK’s leading property website has recorded that asking prices for homes rose in May more than any other month this year as steadier mortgage rates offset the impact of the Bank of England’s recent hike in interest rates.

According to Rightmove, the average new-seller asking price for a home coming to the market this month is £372,894 up from £366,247 in April. This is a monthly increase of 1.8% compared to just a 0.2% average increase seen between March and April. 

‘This month’s strong jump in new-seller asking prices looks like a belated reaction and a sign of increasing confidence from sellers, as we’d usually see such a big monthly increase earlier in the spring season,’ said Tim Bannister, Rightmove’s Director of Property Science.

‘One reason for this increased confidence may be that the gloomy start-of-the-year predictions for the market are looking increasingly unlikely. What is much more likely is that the market will continue to transition to a more normal activity level this year following the exceptional activity of the pandemic years.’

The news, which was announced this week, came as a shock as earlier this year British house prices were forecast by sector analysts to reduce by as much as 15% by mid-2024, however the economy has proved to be more resilient and has managed to avoid a recession.

However, despite borrowing costs having eased from their peak after former Prime Minister Liz Truss’s ‘mini-budget’ in September last year, they remain higher than their level immediately before the financial turmoil kicked in last autumn.

Following this, the Resolution Foundation, a think tank, has estimated that 1.6 million British households are yet to face an average increase of £2,300 in their fixed-rate mortgage bill over this year and next year as those deals mature.

Tim said: ‘The market is still very price sensitive and it is important that new sellers do not damage their prospects of a sale by overpricing initially and reducing later, with agents reporting that it’s the realistically priced new instructions that are selling best.’

There are signs of slowing at the top end of the market, where properties are taking on average 67 days to sell, almost twice as long as this time last year, though still faster than in 2019.

Mr Bannister said: ‘More discretionary sellers at the top end may be prepared to price high and wait for the right buyer, and whilst it is positive that they appear to feel no financial pressure to sell, the data suggests that some sellers in this sector will need to price more competitively if they want to find a buyer in the current market.’

Image: Trayan