House asking prices edge up in March amid ‘best sellers’ market in a decade’

The average asking price for a home in Britain increased in the first two weeks of March, as the number of people enquiring about available properties broke the all-time record.

Asking prices have increased by £2,484 or 0.8 per cent in March so far, reaching £321,064,  according to property website Rightmove. 

This amounted to a 2.7 per cent increase annually and follows on from a strong February.  

Rightmove says the number of potential buyers enquiring about each available property on its website hit a record high in February, and was 34 per cent higher than this time last year, just before the UK went into the first national lockdown.

Seven million people visited the Rightmove website each day in February, up 40 per cent on the same period in 2020. 

It described the market as the ‘best sellers’ market of the past 10 years’ and said that nearly two thirds of the properties currently on agents’ books had already had sales agreed.

The number of sales agreed during the first week in March were up by 12 per cent on the previous year.

Rightmove said it anticipated asking prices to increase further as the market entered the traditional spring selling season.

While some forecasters have updated their estimates on house price increases recently, it is sticking to its prediction of a 4 per cent increase in 2021 which it published in December.

‘The current excess of buyer demand over supply is the largest we’ve seen in the last ten years and suggests that this could be one of the best ever Easters to sell,’ its report said.

Buyers are eagerly awaiting new homes coming to the market, and Rightmove said there were ‘early signs’ that more owners were deciding to market their homes thanks to incentives such as the extension of the stamp duty holiday and news of government-backed 5 per cent mortgages, as well as lockdown easing.

In February new listings had dropped by 20 per cent, but this figure was only 5 per cent down during the first week of March.

This was probably influenced by the fact that in the Budget on 3 March, Chancellor Rishi Sunak announced that the stamp duty holiday – which has had a big impact on the buoyancy of the housing market in the past year – would be extended in its current form until the end of June, and then tapered until September.  

Regionally, Wales has seen asking prices increase by 8 per cent in the last year, while the North West has experienced a 6.5 per cent rise. Homes there were also the quickest to sell, at 57 days on average. 

Tim Bannister, Rightmove’s director of property data said: ‘This strong sellers’ market is good news for those who are looking to put their home on the market as the traditional Easter selling season approaches. 

‘Blossoming buyer demand coinciding with blossoming gardens should put a spring in the steps of sellers, and more of them coming to market will provide a much-needed increase in the choice of property for the many who are looking to buy.’

However, he said that given the frenzied buying activity in the past few months there was a ‘serious shortage’ of homes for sale.

Bannister added: ‘So many sales have been agreed in recent months that we now face a serious shortage of homes available for sale.

There are lots of reasons why many home-owners have hesitated to come to market during the first two months of the year, but these do now seem to be dissipating.

A recovery in fresh supply gives more choice to prospective buyers, many of whom are also potential sellers, which in turn encourages more of them to come to market. Greater supply to match the high demand would ease upwards price pressure.’

Estate agents also continued to report high levels of buyer demand, and suggested that would-be sellers market their properties now in order to ride this wave.

Marc von Grundherr, director of Benham and Reeves in London, said: ‘With the double pronged boost to buyer demand in the form of a stamp duty extension and government guaranteed 95 per cent mortgage products, sellers can ill-afford to sit on their hands with regard to getting their property on the market.

‘A lack of supply to meet the huge levels of buyer demand seen in recent months means that by and large, sellers are securing a very good price for their home.’

Nick Leeming, chairman of Jackson-Stops, added: ‘Across all our branches, the rate that new buyers are coming to the market is much faster than the rate in which new homes are being listed for sale, with 17 buyers chasing every new home that we listed last month.

‘However, we are starting to see signs of rebalancing as more vendors have been in contact over the past week following the Chancellor’s stamp duty holiday extension.

‘For those considering a sale in the next 12 months, now is certainly the time to act to ensure you can take advantage of current favourable market conditions.’

Estate agent firm Knight Frank also said that online enquiries reached their third-highest level in more than a year in the first week of March following the housing announcements in the Budget.

Its analysis of OnTheMarket data suggests that the number of new sales listings in England and Wales rose 18 per cent week-on-week in the seven days to 6 March, the highest such rise since June 2020, a fortnight after the property market re-opened following the first lockdown.

Tom Bill, head of UK residential research at Knight Frank, said: ‘Circumstances are conspiring to produce an active few months in the UK housing market. 

‘While the stamp duty holiday extension, the re-opening of schools and vaccine rollout are driving supply and demand higher, the prospect of summer holidays will inject further urgency into the second quarter of the year.’

Rents are also rising

As well as price rises in the sales market, rents have also been on the rise in recent months – at least outside of the capital.

Research by estate agent Hamptons International showed that year-on-year rental growth outside London hit 8 per cent in February, the highest figure since its index began in 2012. In real terms this equates to an increase of £68 per month.

London saw a double dip in rental growth as rents fell again following five months of growth.

Across Greater London rents fell 0.2 per cent year-on-year, following five consecutive months of growth.

Hamptons said the drop was driven by falls in Inner London. Average rents in Inner London fell 17.7 per cent year-on-year, the largest decrease recorded since the onset of the pandemic. Meanwhile in Outer London, rents grew 5.3 per cent annually, the sixth consecutive month of growth.

The rental growth seen nationally appears to have been fuelled by a lack of stock. The report said 300,000 fewer properties had come on to the rental market since the onset of the pandemic than during the preceding 12 months.

Last month, the number of rental homes on the market fell by double digit percentages in every region apart from London compared with the same time last year. The South West and Wales saw the largest declines, with 48 per cent fewer homes available to rent in February than the same time last year.

There were 16 per cent more homes available to rent in cities across Great Britain in February 2021 than at the same time last year, as renters moved away from urban centres in favour of more suburban and rural locations.

The supply of rental homes in towns and country locations recorded falls of 28 per cent and 52 per cent respectively. This divide was also evident in would-be tenant numbers which remained flat in the countryside, while dropping 10 per cent in cities.

The lack of rental homes on the market has meant that so far this year half of landlords letting a property were able to secure a higher rent than they had previously achieved. This is the highest proportion since 2016, with an average increase of £60 per month.

However, only 37 per cent of London landlords were able to secure higher rents – marking the lowest proportion recorded in any region. In contrast, 62 per cent of landlords in the South West were able to achieve higher rents on their properties.