House sales return to pre-pandemic levels as price growth slows: Rightmove

New seller asking prices rose by just 0.2% this month to £366,247, notably lower than the average increase of 1.2% for this time of year, according to the latest Rightmove data.

Rightmove says this "unseasonal pricing restraint" is a sign that many new sellers are taking note of the economic headwinds and the transitioning of the housing market to a slower pace and more normal activity levels, last seen in the pre-pandemic market of 2019.

As a result, the number of sales agreed is now on a par with the same period in 2019 and agreed sales volumes are now just 1% behind March 2019.

Further highlighting the recovery, monthly sales agreed volumes are now higher than in September for the first time since the mini-Budget took place. However, sales agreed are still 18% behind last year as the market transitions to a more normal level of sales activity.

Leading the recovery to pre-pandemic sales levels is the first-time-buyer sector (two-bedroom and fewer properties) with sales volumes in this sector now 4% higher than in March 2019. By contrast the sectors with larger homes, the second-stepper and top-of-the-ladder sectors, are still 4% and 3% behind 2019 respectively.

First-time-buyer type properties have reached a new record price of £224,963 this month, which may appear surprising given the economic headwinds that have made taking out a mortgage more expensive and saving up for a deposit even more challenging. However, solid buyer demand in this sector, which is now 11% higher than in the same period in 2019, illustrates the continued desire from would-be first-time buyers to own their own home.

Some good news for first-time buyers is that average mortgage rates have been falling over the last few weeks, with lender competition to secure business now strongest in the traditional first-time buyer loan-to-value ranges of 85% and 90%. The average mortgage rate for a five-year fixed at 85% LTV is currently 4.46%, with the lowest rate for this mortgage type standing at 4.19%. This has edged down from an average of 4.65% a month ago, but it is still much higher than the average rate of 2.64% at this time last year.

Tim Bannister, Rightmove’s director of property, said: “Agents are reporting that many sellers have transitioned out of the frenzied multi-bid market mindset of recent years and understand the new need to tempt Spring buyers with a competitive price. The current unexpectedly stable conditions may tempt more sellers to enter the market who had been considering a move in the last few years but had been put off by its frenetic pace. Buyers may have struggled to find a home that suited their needs in the stock-constrained market of recent years and will now find more choice available. However, those who have now decided to make a move should not wait around too long to make an enquiry if they see the right home for sale, as not only is the number of sales agreed now back to pre-pandemic levels, but homes are also on average selling twelve days more quickly than at this time in 2019.

“The first-time-buyer sector typically accounts for over a third of all sales which are often the start of chains, so these positive sales agreed figures are good for the health of the whole market. The current multi-speed market is highlighted by sales of larger homes continuing to lag behind, with some sellers in the upper sectors likely needing to show a greater degree of pricing restraint to attract buyers in this much more price-sensitive market. More competition amongst lenders in the smaller deposit, higher loan-to-value ranges is positive news for those would-be first-time buyers who have saved up their deposit and can still afford to move. However, it remains a challenging environment to get onto the ladder, with new record average asking prices and higher borrowing costs to budget for than a year ago.”