House prices hit a fifth straight record at £368,614 but there are signs the pace of growth is slowing
Prices rose a modest 0.3 per cent for the month – the equivalent of £1,113 – the smallest increase since January, data from Rightmove shows.
Property asking prices hit a fifth straight record at £368,614 but there are signs the pace of growth is slowing, new research has found.
It said that despite five consecutive rate hikes and rising cost of living, buyer demand for every available property remains very strong, 113 percent above the five-year average before the pandemic in May.
However, there are signs that this is easing further, as this measure fell 8 percent in May from April.
After a very strong first half of the year, affordability constraints are likely to have a greater impact on market behavior in the coming months, with further rate hikes on the cards.
This, along with more choice hitting the market for shoppers and the usual seasonal fluctuations, means there’s likely to be some month-to-month price declines in the second half of the year.
Rightmove expects this to bring house price growth to about 5 percent by the end of the year, which it originally forecast in December.
Tim Bannister, Director of Property Science at Rightmove, said: “The exceptional pace of the market is slowing somewhat as demand begins to ease and price increases slow, which is very much to be expected given the many record-breaking numbers over the past two years.
“If we look at the number of buyers turning to real estate agents compared to 2019 or the five-year average before the pandemic, demand is still very high compared to what used to be considered normal.
Mr Bannister said agents have said that while they may have had slightly fewer inquiries for each property in recent months, they are still seeing significant interest from multiple buyers and are achieving successful sales.
“As we enter the second half of the year, we expect price growth to slow further, especially given the mounting affordability issues people are facing.
“We expect this to bring the annual price growth rate down from the current 9.7 percent to the 5 percent increase Rightmove forecast earlier in the year.”
Buyers are now being greeted with a new choice as the number of properties coming onto the market has increased by 7 percent compared to the same time last year.
However, this metric lags 11 percent compared to the same point in 2019.
Mr Bannister added: “A transport backlog means those looking to move this year who have yet to act will need to do so in the coming weeks.
“It currently takes an average of 150 days to complete a purchase after agreeing a sale, 50 days longer than at this point in 2019.
“This means those hoping to strike a deal in time to enjoy Christmas in a new home will need to hit the market over the next few weeks to give themselves the best chance of finding a buyer and keeping the transaction up end of year to close year.”
According to Rightmove, more than 500,000 homes are currently being sold under contract — a number that’s 44 percent higher than at this point in 2019 and 39 percent higher than the five-year average before the pandemic.