While a 0.8% annual uptick in house prices might seem underwhelming, positive market sentiment and a boost in sales indicates acceleration could be on the way.
The latest house price index from Rightmove released this week showed average asking prices had fallen slightly on a monthly basis to an average of £378,240 – but the figures were skewed, as they have been for some time, with gains in the North and Midlands and falls in the South and London.
But one of the standout figures from Rightmove’s index was the fact that May was the busiest month for sales agreed since March 2022, while sales were up by 6% compared with this time last year.
Buyer numbers and homes listed for sale are both at high levels right now, which looks set to keep the momentum going in the housing market. All bets were off on whether the stamp duty change in April would stall the market, but the figures indicate it has done little to dent appetite – putting the property sector in good stead for the coming months.
This week, the Bank of England will reveal the outcome of the Monetary Policy Committee’s latest decision on interest rates. Many analysts are expecting the rate to be held at 4.25% – but whether they remain stable or fall, lenders have been slashing rates and rolling out more product choice at pace over the past couple of months.
Confidence climbs amid market resilience
According to Stephen Ward, director of strategy and external relations, Council for Licensed Conveyancers, multiple market factors point towards the fact that “house prices are unlikely to stay static for long”.
He believes there is lots to be optimistic about that creates benefits for those looking to buy and sell now. “There are mixed messages depending on who in the industry you speak to or what you read, but my takeaway from the first few months of the year is a positive one,” he said.
Part of this viewpoint is based on the latest survey results from the Council for Licensed Conveyancers’ (CLC’s) most recent Confidence Tracker, which showed that almost three quarters (72%) of conveyancers are confident in the stability of the current housing market. This is up from 55% in the previous tracker.
The survey also found that conveyancers were experiencing more optimism among buyers and sellers – with 46% seeing buyer confidence in the latest tracker compared with 29% at the start of the year.
Where could house prices go from here?
The latest figures from Rightmove show that house prices in the North West climbed the most month-on-month and year-on-year in June, up by 0.9% and 3.9% respectively. This is significantly ahead of the national average.
Similarly, house prices in Yorkshire and the Humber were hiked by 0.2% month-on-month and 1.9% annually, while prices in the East Midlands also showed positive momentum on a monthly basis with a 0.1% rise. Wales also had a 0.4% monthly increase.
The trends seem to show that affordability remains a key aspect for property buyers, while the prospect of greater capital appreciation is also fuelling property investors to target these stronger performing regions. This has only been highlighted further by the stamp duty change.
This view is supported by Richard Donnell, executive director of research at Zoopla, who said: “Housing market activity and house price inflation are currently strongest in areas where homes are more affordable. In broad terms, this covers most areas outside the southern regions of England.”
In predictions from the Royal Institute of Chartered Surveyors (RICS), while house prices have levelled out more recently, they are expected to climb again over the course of the year as confidence continues to improve.
Meanwhile, Knight Frank recently upgraded its outlook for the market, and now predicts house prices will rise by 3.5% by the end of the year (up from 2.5% in its previous forecast). Savills is slightly more optimistic, predicting 4% growth overall.
