Introduction: Asking prices for homes hit record
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The spring selling season is picking up speed in the UK housing market, where asking prices for homes has risen to a record level.
Online property portal Rightmove reports this morning that the average price of property coming to the market for sale hit a new record of £375,131 in the last month, up 0.8% on April.
However, that only leaves average asking prices 0.6% higher than a year ago.
Today’s data shows that activity has picked up this year, with 17% more sales in the first four months of 2024 than in 2023 despite the Bank of England maintaining base rate at 5.25% since last August.
Rightmove reckons that “pent-up demand from would-be buyers” who dropped out of the market last year is now driving the market, even though mortgage rates have remained high for longer than expected.
Asking prices are not the same as selling prices, of course – recent data has shown a drop in sales prices.
Last month, several leading UK lenders raised their fixed-rate mortgage deals, but this has started to reverse with some lenders cutting rates last week.
Rightmove reports that price growth is being driven by the top-of-the-ladder properties, where asking prices are 1.3% higher than last year. These properties tend to be less sensitive to high mortgage rates.
Asking prices climb to another record high: ‘The top-of-the-ladder sector is still leading the way,’ says Rightmove’s Tim Bannister, as larger homes drive price rises as well as buying & selling activity this Spring. https://t.co/8LRbSvvFc9 pic.twitter.com/QqBmNW5ro4
— PrimeResi Journal (@PrimeResi) May 20, 2024
The agenda
-
9am BST: City minister Bim Afolami gives speech on “realising the benefits of economic sovereignty to reinforce the UK’s capital markets” at CityWeek conference
-
10am BST: Bank of England deputy governor Ben Broadbent gives speech on “New evidence on the Monetary Transmission Mechanism workshop”
-
11am BST: Spanish consumer confidence for April
Key events
Ryanair says summer fares may be flat
Happily for holidaymakers, flight prices may not rise much this summer.
Budget airline Ryanair says it is “cautiously optimistic” that peak summer fares this year will be “flat to modestly ahead of last summer”.
Ryanair reports that recent pricing has been “softer than we expected”, requiring it to make more cuts to pricing in the last quarter than a year ago to fill its seats.
CEO Michael O’Leary told an investor presentation:
“It is a bit surprising that pricing hasn’t been stronger and we’re not quite sure whether that’s just consumer sentiment or recessionary feel around Europe but we still see peak travel demand certainly through July and August being strong.
“And if we have to discount or cut fares to fill to 94% load factor in April, May and June then so be it.”
The airline has also reported a 34% rise in profits after tax to €1.92bn (£1.64bn) for the year to the end of March, with passenger numbers up 9% despite disruption to Boeing aircraft deliveries (which had been expected to push up flight costs this year).
Ryanair has also added former MP Amber Rudd, the ex-Home Secretary, to its board.
Amber Rudd, former Home Secretary, to join the board of Ryan Air.
— Graham Lambert 💙 (@100glitterstars) May 20, 2024
UK rents are also climbing, particularly for tenants who are renewing their rental agreements.
Hamptons has reported that tenants renewing an existing contract in Great Britain saw their rent rise by an average of 8.3% over the last 12 months, outpacing rental growth on a newly let property (6.4%).
But despite that squeeze,tenants who stay put and renew their contract are still paying 13.4% or £178 pcm less on average than someone who moved into a new home.
Aneisha Beveridge, Head of Research at Hamptons, says:
“Many tenants had enjoyed years of no or below-inflation rent increases, particularly when rents weren’t rising much on the open market and mortgage costs were falling. Landlords were often content with a small gap between the market rate for their home and what their tenant was paying. However, 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.
“Tenants fortunate enough to be protected from higher rents by their landlord or longer contracts are increasingly seeing their rents rise. These increases for renewing tenants tend to be lower and stretched over a longer period than for newly let homes, often meaning tenants still pay below market rate. But even so, these hikes can still add up to hundreds of pounds a month.
“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.”
Gardens in bloom, those at the top of the ladder demand more for their homes in May pushing up the avg asking price to a record £375,131. This late spring frivolity isn’t reserved to those just at the top but hope born from a 17% inc in sales in the 1st 4mths of 2024 when… pic.twitter.com/6bElDINOIg
— Emma Fildes (@emmafildes) May 20, 2024
These charts highlight how average asking prices have picked up this spring, after a lull at the end of 2023:
Sellers hoping to be in a new home for Christmas ‘should take action now’
Remarkably, Rightmove also reckon that people hoping to sell their home and move before Christmas (!) should start taking action now.
They report that it is taking 62 days on average to find a buyer before the legal process of selling the house even begins.
And with the average time between agreeing a sale and legal completion currently “a painful five months”, or 154 days, it is taking over seven months on average from a seller coming to market to completing their move.
Rightmove’s Tim Bannister says the “extremely lengthy legal completion process” is a frustrating barrier for home movers to get over.
Bannister explains:
It may seem surreal to be thinking about Christmas in May, but we know that many would-be sellers picture celebrating the festivities in a new home, and to achieve that, now is the time to be coming to market.
One strategy that is still giving some sellers the edge in this price-sensitive market, is working closely with an estate agent to price attractively right at the start of marketing, to give themselves the best chance of finding a buyer quickly.
Introduction: Asking prices for homes hit record
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The spring selling season is picking up speed in the UK housing market, where asking prices for homes has risen to a record level.
Online property portal Rightmove reports this morning that the average price of property coming to the market for sale hit a new record of £375,131 in the last month, up 0.8% on April.
However, that only leaves average asking prices 0.6% higher than a year ago.
Today’s data shows that activity has picked up this year, with 17% more sales in the first four months of 2024 than in 2023 despite the Bank of England maintaining base rate at 5.25% since last August.
Rightmove reckons that “pent-up demand from would-be buyers” who dropped out of the market last year is now driving the market, even though mortgage rates have remained high for longer than expected.
Asking prices are not the same as selling prices, of course – recent data has shown a drop in sales prices.
Last month, several leading UK lenders raised their fixed-rate mortgage deals, but this has started to reverse with some lenders cutting rates last week.
Rightmove reports that price growth is being driven by the top-of-the-ladder properties, where asking prices are 1.3% higher than last year. These properties tend to be less sensitive to high mortgage rates.
Asking prices climb to another record high: ‘The top-of-the-ladder sector is still leading the way,’ says Rightmove’s Tim Bannister, as larger homes drive price rises as well as buying & selling activity this Spring. https://t.co/8LRbSvvFc9 pic.twitter.com/QqBmNW5ro4
— PrimeResi Journal (@PrimeResi) May 20, 2024
The agenda
-
9am BST: City minister Bim Afolami gives speech on “realising the benefits of economic sovereignty to reinforce the UK’s capital markets” at CityWeek conference
-
10am BST: Bank of England deputy governor Ben Broadbent gives speech on “New evidence on the Monetary Transmission Mechanism workshop”
-
11am BST: Spanish consumer confidence for April
