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Average house price hits record high as mortgage rates cut.

3 June 2024

The average price on a home reached a record high in May, according to Rightmove.

The price of a property coming to market in the UK rose 0.8 per cent, or £2,807 month on month. The average is now of £375,131.

Pent-up demand from would-be buyers who paused their plans last year is a key driver behind increased home mover activity despite mortgage rates remaining elevated for longer than anticipated, Rightmove said.

The number of sales being agreed during the first four months of the year is 17 per cent higher than last year.

May is typically a strong month for price growth, with new price records having been set in May in 12 of the previous 22 years, the report said.

Since the last price record set a year ago in May 2023, average prices are only 0.6 per cent higher overall, a reminder that the market remains very price sensitive, it added.

In some positive signs for the mortgage market, HSBC UK, Barclays and TSB cut their mortgage rates last Friday.

Tim Bannister, Rightmove’s director of property science, said: “The momentum of the spring selling season has exerted enough upwards price pressure to reach a new record asking price.”

Rightmove anticipates the number of completed house sales this year to reach around 1.1 million, but it said the lengthy time to complete a sale after finding a buyer remains a challenge for both agents and movers.

The average time between agreeing a sale and legal completion is five months. In total, it is taking more than seven months on average from a seller coming to market to completing their move, meaning would-be sellers hoping to celebrate Christmas in a new home need to be coming to the market about now, the website said.

The large gap between market rates and what many tenants are paying is a big disincentive for them to move unless they have to. Moving increasingly means getting less home for more money.

While time will eventually close the gap between what sitting and new tenants are paying, it may take longer if rental growth on the open market starts picking up again.

Tenants renewing an existing contract in Britain typically saw their rent rise by an average of 8.3 per cent over the 12 months to April, outpacing rental growth on a newly let property (6.4 per cent).

A new report found house prices in rural parts of Great Britain increased by 22% between 2018 and 2023, compared to 17% in urban areas.

For its calculations, Nationwide combined house price data from the Land Registry with area classifications from the Office for National Statistics.

These show that 61% of local authorities in Great Britain are considered 'predominantly urban', while 26% are classified as 'predominantly rural'.

The south west of England has the highest proportion of rural local authorities (14 out of 26), while Greater London has none.

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