Property asking prices have hit another record high, according to Rightmove.
The asking prices of newly-listed homes went up by £2,335 (0.6 per cent) in May to hit £379,517, Britain’s biggest property portal revealed.
Despite reaching a record high, May’s price increase is the lowest at this time of year since 2016, reflecting a more subdued spring market.
This, Rightmove, said, is because the number of homes on the market has risen to levels not seen in a decade.
More homes on the market means sellers are in competition to find a buyer for their property, which can keep prices in check.
There has been a 32 per cent increase in the number of sellers who have changed estate agents after struggling to snag a buyer, according to Rightmove’s data.
New seller asking prices rose by 0.6% (+£2,335) this month, to a new record of £379,517
This reflects the high market competition, and the frustration of some owners that their homes aren’t selling.
Colleen Babcock, property expert at Rightmove, said: ‘The ten-year high choice of homes for sale means that sellers need to be aware of the level of competition they’re facing for the attention of buyers, and the prices that are being advertised in their location.
‘In the current market, buyers may well have several similar homes to choose from in their area, and a home which appears over-priced compared to the competition may not get a second look.
‘This month’s price increase being the lowest in May for nine years is a sign of a market that favours buyers and is more subdued than usual.’
What next for house prices?
Looking ahead, mortgage rates will be crucial in determining the level of buyer activity for the rest of the year.
They have been trickling downwards, and there is hope that the recent interest rate cut by the Bank of England, the second of the year, may spur on further reductions from lenders.
The cheapest available two-year fixed mortgage rate is now 3.72 per cent, down from 4.75 per cent last year.
On a £200,000 mortgage being repaid over 25 years, that’s the difference between paying £1,025 a month and £1,140 a month.
Average earnings have also been going up and are now over 5 per cent ahead of this time last year, outpacing annual house price growth which is now at only 1.2 per cent.
Some buyers may also find they are able to borrow now than they were at the start of the year.
Subdued: Despite reaching a record high, May’s price increase is the lowest at this time of year since 2016 thanks to a glut of homes on the market
A number of major mortgage lenders have been relaxing their affordability rules helping buyers to borrow more.
Last week, Nationwide Building Society adjusted its ‘stress rates’ – the hypothetical higher mortgage rates it tests borrowers’ finances against when they apply for a mortgage or remortgage.
Lenders do this to check whether borrowers could still afford their monthly payments if their mortgage rate increased.
Nationwide reduced its stress rates by between 0.75 and 1.25 percentage points, meaning the average borrower could be loaned £28,000 more.
Tomer Aboody, director of specialist lender MT Finance, said: ‘As interest rates reduce, we should see affordability increase which in turn will encourage buyers to be active.
This should produce a more buoyant market with higher transaction levels.
‘In the meantime, buyers and sellers may well take stock of the current economic climate and wait and see before making their move.
‘If there is another rate reduction in the latter half of the year, we could see a big rush in activity in the final quarter.’
Estate agent Knight Frank recently revised its forecasts for house price growth this year.
It now predicts that house prices will rise by 3.5 per cent over the course of 2025, up from 2.5 per cent previously.
The change was made because of how much the interest rate outlook has improved.
Markets now expect interest rates of about 3.5 per cent this time next year, which compares to an estimate of more than 4.25 per cent in early January.
Even so, Knight Frank says that it remains firmly a buyer’s market.
‘Buyers are able to take their time at the moment because they have so much to choose from,’ said Andrew Groocock, chief operating officer at Knight Frank.
‘That sort of competition means sellers need to get the asking price right when the property is first launched.
‘Even after a reduction, the risk is that a property has already become stale in the minds of buyers, which means it can then take longer to sell or the chances of it falling through are higher.’
