What's Driving The Record House Prices? Insights From Rightmove Index

Rightmove has just released its latest Rightmove House Price Index, which gives key insights into what is happening in the UK property market. Their findings show that the UK has seen an unprecedented surge in asking prices, driven by what Rightmove has coined “pent-up demand”. As the spring selling season picks up steam, we are seeing a noticeable upward pressure on house prices. So, what exactly is causing this surge in prices?

At Leslie & Co., we take a closer look at the insights provided by the Rightmove Index and explore the factors driving this upward trend. 

Understanding the Rightmove House Price Index

May sees average property prices on the market increase by 0.8% (£2,807), reaching an unprecedented high of £375,131, driven by the spring selling season's slight push on prices. Historically, May often sees notable price surges, with new records established in 12 of the past 22 years. The premium homes at the top of the ladder continue to spearhead growth, witnessing a 1.3% rise from the previous year. Yet, despite a new peak in May 2023, the overall increase since then is a modest 0.6%, indicating ongoing market sensitivity to price changes.

“Some predicted that property prices would suffer sharp falls and take a while to recover following the Bank of England increasing the Base Rate up to 5.25%, where it has remained since August 2023. However, the momentum of the Spring selling season has exerted enough upwards price pressure to reach a new record asking price. The top-of-the-ladder sector is still leading the way, while from a regional perspective the North East, with the cheapest average prices in Great Britain, has seen the strongest price growth. However, it’s important to remember that prices overall are still only 0.6% ahead of this time last year. The market remains price-sensitive, and with prices reaching new records in the majority of regions and mortgage rates remaining elevated, affordability for many home-buyers is still stretched.”

Tim Bannister Rightmove’s Director of Property Science

The role of pent-up demand in driving prices

Soaring pent-up demand is propelling increased engagement amongst buyers and sellers, even as mortgage rates stay high longer than expected. Within the year's initial four months, transactions between buyers and sellers have risen by 17% over the same time frame in 2023, surpassing the 12% rise in new sellers entering the market. This surge is predominantly in the high-end market, encompassing properties with four or more bedrooms.

The scarcity of available homes in this premium segment during the pandemic, coupled with the swift escalation and later fluctuation of mortgage rates post the mini-budget, rendered this sector's activity highly reactive to potential movers pausing their plans. Currently, with more stable, though elevated, mortgage rates and increased options for buyers, many who had deferred their moves in this segment are now re-entering the market.

Forecasts predict that this year's completed sales transactions could hit around 1.1 million, buoyed by Rightmove's key lead indicators, which leverage the UK's broadest property selection and live market data, hinting at a promising trend towards this milestone. Nonetheless, the extended time frame from the sale agreement to completion remains a significant hurdle for agents and movers alike.

Currently, the average journey from sale agreement to legal finalisation stretches painfully to five months, approximately 154 days. Altogether, sellers are looking at over seven months on average from market listing to move completion. This timeline implies that potential sellers aiming for a festive move-in must consider listing their properties immediately.

Implications for buyers and sellers

Parliament is scrutinising the sluggish completion times in England's home buying and selling process as part of its efforts to streamline the process. When measured against global standards, the delay in England is markedly pronounced, underscoring the pressing need for enhancements. Rightmove recommends fostering a smoother procedure by ensuring earlier provision of comprehensive property details to prospective buyers and enhancing connectivity among transaction participants through digital means.

Rightmove has pinpointed a tactic through its extensive market analysis that positions sellers advantageously for swifter transactions: engaging an estate agent for setting an initial competitive price to obviate subsequent price reductions. Properties priced appropriately from the beginning tend to secure an agreement within an average of 32 days – a fraction of the 112 days it usually takes when price adjustments are necessary to attract a purchaser.

Future outlook: What's next for the housing market?

If you would like to discover how the current housing market impacts the sale of your Ealing home, please contact our team today on 020 3488 6445.