Confidence returning to UK housing market as asking prices jump: Rightmove

ASKING prices for British homes rose in May by more than in any other month this year as a better economic outlook and steadier mortgage rates offset the impact of the Bank of England’s interest rates rises, property website Rightmove said.

The average price of homes coming to the market jumped by 1.8 per cent, or £6,647 (S$11,280) from April, above the average rise for May of 1.0 per cent, Rightmove said on Monday.

“One reason for this increased confidence may be that the gloomy start-of-the-year predictions for the market are looking increasingly unlikely,” Tim Bannister, director of property science at Rightmove, said.

Earlier this year, British house prices were forecast by sector analysts to fall by as much as 15 per cent by mid-2024. But since then the economy has proved to be more resilient than expected and has so far avoided predictions of a recession.

Borrowing costs have eased from their peak after former prime minister Liz Truss’s “mini-budget” in September but they remain higher than their level immediately before the turmoil in financial markets in the autumn.

Rightmove said mortgage rates had been stable on a week-to-week basis.

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The BoE hiked Bank Rate by a quarter-point to 4.5 per cent earlier this month to help bring down inflation which was running at 10.1 per cent in March.

Rightmove said buyer demand was 3 per cent higher in May compared with the same month in 2019, before the coronavirus pandemic distorted the market.

Other indicators have painted a more mixed picture.

Mortgage lender Halifax said earlier this month that property prices grew at the slowest annual pace in over 10 years in April. But rival Nationwide said prices rose by a monthly 0.5 per cent in April after falling for the seven previous months.

The Resolution Foundation, a think tank, has estimated that 1.6 million British households are yet to face an average increase of £2,300 in their fixed-rate mortgage bill over this year and next year as those deals mature. REUTERS