UK house prices rise by 1.5% in biggest increase for 10 months

London: An increase in buyer demand and stronger house sales during March have combined to push the average UK home’s asking price up by a further £5,279 to almost £370,000, as the market picks up after a “muted 2023”.

According to the UK’s biggest property website, Rightmove, this month’s 1.5% price growth is notably higher than the historical March average of 1%, and is the biggest monthly increase for 10 months.

Rightmove said estate agents were reporting a significant increase in buyer demand this month as more people were “seeing a window of opportunity to buy”.

The website said the average UK asking price now stood at £368,118, a significant increase, but was still £4,776 below the May 2023 peak as the market continued its recovery after a “muted 2023”.

Last week Halifax said the average UK house price was just £1,800 off the peak recorded in June 2022.

Tim Bannister, the director of property science innovation at Rightmove, said the number of sales agreed since the beginning of March was 13% higher than at the same time last year, and that demand for larger homes appeared to be driving most of the price jumps.

He said the average time to find a buyer was now 71 days, the longest at this time of year since 2019. Agents are reporting that buyers are quickly cherrypicking attractively priced properties, while overpriced ones are taking much longer, pushing up the average time taken to sell.

London saw the biggest increase in buyer demand – overall and for top-of-the-ladder properties – compared with this time last year. The return to the office, wage increases, stable house prices and the slowing of inflation have all helped increase buyer interest in living in the capital again, it said.

After several weeks of creeping mortgage-rate rises, the average five-year mortgage rate is now 4.84% compared with 4.64% five weeks ago, Rightmove said, a trend that continues to test buyer affordability.

After a chaotic 2023, the mortgage market has become more unpredictable, with rates increasing one week, only to fall the next as lenders change their pricing on the back of the latest economic data.

“It’s been a positive first three months of the year for the market and better than many anticipated,” Bannister said. “However, we know from last year how quickly the picture can change.

“Sellers are right to feel more confident and optimistic this year, but buyer affordability remains stretched and higher mortgage rates are an ongoing challenge,” he said. “With the market still sensitive to pricing and external events, some caution and willingness to negotiate is advised.”