20th January 2023

House Prices Rising Again….

New Year bounce for sellers after extended year-end slow down

• After around three months of widespread price stagnation in late 2022, average new seller asking prices rise again by 0.9% in January 2023, the biggest increase at this time of year since 2020 as ‘quick off the mark’ New Year sellers test the market.
  • The number of prospective buyers contacting agents is up 4% compared to the same period in 2019, and up by 55% compared with the two weeks before Christmas, the biggest New Year bounce since 2016 after the extended slowdown at the end of the year
  • However, the number of enquirers is down by a third compared to the buoyant market of this time last year
  • Would-be sellers jump into action with 5th January the third busiest day ever for people asking agents to come out and value their home, an early sign of confidence for the year ahead
  • Average monthly mortgage payments for hard-pressed first-time buyers’ continue to fall as mortgage interest rates soften for now, with some deals now on offer nearer 5%

Whilst a rise in asking prices is often traditionally expected in January, this is the highest at this time of year since January 2020. After the market’s uncertain final few months of 2022, this familiar seasonality is a tentative sign of stability, with new sellers feeling confident to test the market. And yes it’s still early days, but this is a more encouraging start to the year than many anticipated.

“The seasonal increase in new seller asking prices this January from December is particularly encouraging for movers who are looking for the reassurance of familiar trends and a calmer, more measured market after the rapidly changing and at times chaotic economic climate of the final few months of last year.

However, while average asking prices did rise in January, they are still less than their peak in October, meaning prices have been stagnating. The early-bird sellers who are already on the market and have priced correctly are likely to reap the benefits of the bounce in buyer activity, while over-valuing sellers may get caught out as property stock builds over the next few weeks and months, and they experience more competition from other better-priced sellers in their area.

It will be important for the vast majority of sellers to remember that a drop in your asking price is likely not an actual loss compared with what you paid for it, only a failure to live up to aspirations. Listening to your estate agent’s advice about your hyper-local market and pricing right the first time can avoid a stale sale and the need for even greater reductions later.”

At the beginning of the year, buyer demand is up by 4% compared with the same period in the last “normal” pre-pandemic market of 2019. The bounce-back in activity this January was bigger than usual this year, following an extended year-end lull. The number of prospective buyers sending an enquiry to an estate agent about a property for sale jumped by 55% in the last two weeks, compared with the previous two weeks, an indicator of pent-up demand. In recent years, this New Year jump in enquiries has been around 45%, and it was last higher than this in 2016, a potentially positive sign for the year ahead.

However, buyer demand is down by 36% compared to last year’s busiest ever start to a year, as the market navigates its return to a more normal level of activity.

On 5th January, the number of people sending a request to an estate agent to value their home, typically the first step for a future seller, was the third largest on record, an early sign of market confidence. Indeed, the last week has been the busiest for these home valuation requests since August 2022. However, even with the prospect of more sellers coming to market, the number of available homes for sale is still well below long-term norms.

Our View 

“Over-inflated property prices seen over the last 18 months have largely disappeared, which in turn has encouraged buyers back into the market and sales enquiries are on the rise. The initial shock to the housing market last autumn, after the mini-budget, has also subsided.

As a First Time Buyer (FTB), your availability is strong with more stock expected. Therefore having your ‘Mortgage in Principle’ in place is key. Especially as rates are reasonable at this time, but expected to increase again next month if the monetary committee at the Bank of England (BOE), decide to increase interest rates to further help the economy.

Those of you looking to upsize and downsize, will also see additional stock in the short term due to the increased involvement of the FTB’s as we move towards the traditional buying frenzy in early spring to summer.