A return to confidence among vendors as the market continues to correct itself has seen average asking prices inch back up across all English regions, Scotland and Wales during May, according to the latest market analysis from Home.
Countering an uptick in asking prices this month, rising stock levels and longer marketing times, while normal for the time of year, will both serve to restrain further price hikes going forward and could potentially risk a stand-off between buyers and sellers, sparking a further price correction and stall the market.
According to data from Home, to date, the recovery of the UK property market in the wake of the interest rate shocks is well underway. Prices underwent a significant correction and subsequently, the market regained much-lost momentum. This month's data is consistent with the typical operation of the marketplace for the time of year. In fact, the current key indicators are completely in line with market observations for the seven years prior to the pandemic.
More cautious pricing might have been expected given the considerable uncertainty about interest rates. However, vendors appear to have brushed aside the Bank of England's hand-wringing and negative messaging that was seemingly designed to undermine buyer confidence and create a fearful climate of wait-and-see hesitancy.
The most startling example of seller confidence during April was in the South East, culminating in a jump of 1.6% and making up for some of the ground lost during the correction. Buyers will be reminded that the market moves on quickly and the time for bargain-hunting is short.
Meanwhile, markets in the northern regions of England, Wales and Scotland are in great shape and continue to operate with marketing times much lower than in pre-COVID years. The North East sales market in particular has been transformed beyond recognition. It is in these areas that home price growth remains positive year-on-year and where we expect the most growth going forward.
Although mortgage rates have crept up slightly, they remain extraordinarily low compared to the rate of inflation and this will continue to support demand and aid the recovery.
Fixed-rate deals are still available below 4% while inflation remains stubbornly north of 10% (either CPI or RPI). Moreover, the same goes for remortgage rates and this serves to prevent the flood of repossessions that would be inevitable if interest rates were over and above the rate of inflation as they were in the 1970s.