According to the latest House Price Index released by Rightmove, the UK has seen a fourth consecutive record of rising house prices.
House prices are now £55,000 higher than pre-pandemic levels and the current average UK house price is £367,501 – this is a monthly rise of £7,400. In comparison, in the two years before the pandemic, the rise was just £6,000.
Although levels of activity are still high, there are signs that the market is starting to slow down. The number of buyers contacting estate agents is down 14% year on year – but still 31% higher than in the 2019 market.
The most in-demand stock are two and three-bedroom semi-detached homes, but the new stock that is most desperately are four-bedroom semi-detached houses in Scotland.
In terms of the speed of selling, Scotland is the fastest selling market in the UK with properties securing an offer in just 21 days. Here in East Renfrewshire, we are finding that properties are selling faster than the average. Across the UK the speed of market means that available properties are down 16% compared to a year ago and down 55% compared to 2019.
In terms of affordability for first-time buyers, the average monthly mortgage payments are currently higher than rental payments after the recent interest rate rises. As we have historically low interest rates, mortgage payments are only 11% higher than ten years ago. In contrast, rental payments are 40% higher.
Those purchasing their first home on their own are the hardest hit as they currently need a 34% deposit compared to a 25% deposit ten years ago – and mortgage rates are on the rise. If a couple are purchasing a property together when taking home the average salary they should be able to afford their first with a 10% deposit, although that deposit size has increased from £14,269 to £22,312. This is a rise of 56%.
Tim Bannister, Rightmove’s Director of Property Science
“People may be wondering why the housing market is seemingly running in the opposite direction to the wider economy at the moment. What the data is showing us right now is that those who have the ability to do so are prioritising their home and moving, and the imbalance between supply and demand is supporting rising prices. Though demand is softening from the heady levels we saw this time last year, the number of buyers enquiring is still significantly higher than during the last ‘normal’ market of 2019, while the number of homes for them to choose from remains more constrained. We anticipate that the effects of the increased cost of living and rising interest rates will filter through to the market later in the year, and a combination of more supply of homes and people weighing up what they can afford will help to moderate the market.”
Data shows that the average monthly mortgage payments are currently £901 and these overtake average monthly rental payments at £887. However, the figures also reveal that over the last decade this gap in payments has narrowed, so now it isn’t cheaper to rent a home than buy each month.