Homeownership remains a cornerstone of the British dream for many, symbolising stability, security and a sense of belonging. However, the landscape has evolved over the years, witnessing a surge in private renting and a growing interest in alternative housing models such as co-living and community-led developments. In May, the average house price soared to a historic high of £375,131, marking a notable monthly increase of 0.8%, equivalent to £2,807. This surge in prices reflects several factors shaping the UK housing market.
International interest has also further the growth of house prices in Britain, as investors across the globe recognise the stability created by a large renting pool and a well-established set of legal rights and practices that insulate any investor aiming to achieve a predictable return on investment.
To begin with, pent-up demand among prospective buyers who postponed their purchasing plans last year has created a backlog of demand. This has fuelled increased activity in the housing market despite mortgage rates remaining elevated longer than initially anticipated.
The data also highlights a notable uptick in sales activity, with the number of sales agreed in the first four months of this year surging by 17% compared to the same period last year. This surge underscores robust buyer interest and confidence in the market despite lingering uncertainties.
Rightmove’s director of property science noted, “The momentum of the spring selling season has exerted enough upward price pressure to reach a new record asking price.”
Moreover, historical price trends reveal interesting patterns, with May historically being a strong month for price growth. Over the past 22 years, new price records were set during May on 12 occasions, indicating a seasonal trend of heightened activity and demand during this period. However, despite the record set in May 2023, overall price growth has been relatively modest, increasing by just 0.6% since then. This suggests a degree of stability and moderation in price appreciation, mitigating concerns of overheating or speculative bubbles in the market.
Aneisha Beveridge, head of research at Hamptons, explained, “Over the last two years, strong rental growth on the open market has meant that the gap between market rates and what some tenants were paying rose significantly. 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.”
Looking ahead, the timing of listing properties becomes crucial for sellers, especially those aiming to complete their moves by Christmas. With an average duration of seven months from listing to completion, including five months from sale agreement to legal completion, sellers should act promptly to capitalise on the current momentum in the market.
While challenges and uncertainties persist, the market remains buoyant, offering opportunities for both buyers and sellers.
By Mitchell Walsh, CEO of Integritas Property Group