February has seen average house prices hit a plateau, for numerous reasons. Why have house prices stalled?
Why Have House Prices Stalled? The Situation
The busiest time of the year for home moves is soon to arrive. In the spring, more people begin looking for a new house, and we start to see more properties offered for sale. So, at this time of year, we also typically observe an increase in the average asking price. This is possible because new sellers can choose their home’s pricing to appeal to a picky buyer market.
Although new sellers haven’t been raising their asking prices this month, prices have remained largely unchanged. In Great Britain, the average asking price for a home has increased by just £14 (+0.0%) to £362,452.
Despite the fact that this is the smallest increase from January to February that we have ever seen, consider it a precursor to a year with a more favourable housing market for those looking to move into a new house.
Why The Slow-Down?
The imbalance between supply and demand, with many more people wishing to relocate than there were properties for sale, has been one of the major factors influencing the increase in home prices we’ve seen over the previous two years.
We are finally entering a more calm housing market after two and a half years of a quickly moving market, with several bidders and cash buyers waiting up to buy every home for sale.
The good news is that there are more options and less competition now than there was a year ago, despite the fact that there is still a shortage of homes that are available for sale. In comparison to last year’s record low levels, there are now 48% more properties available for sale.
Patience For Potential Buyers
Buyers have more time and space to ensure they find the ideal house in a sluggish market. In order to find the ideal buyer more quickly, real estate brokers advise house sellers to set a realistic asking price when they first list their property.
This month, the main concern was whether or not new sellers will raise their asking prices, as is customary as the spring selling season approaches. The flat average asking price for this month suggests that many sellers are being conservative with their pricing. We’re entering a market that moves more slowly. Due to the higher expense of paying back a mortgage, buyers will take longer to discover the ideal home at the ideal price.
Why Have House Prices Stalled? Many Are Ready To Move
Many purchasers are eager to begin their transactions. When compared to the same two weeks in 2019, when we last had a “normal” housing market, estate agents have received more inquiries.
After the ambiguity that followed the mini-budget, average mortgage rates also decreased. According to the most recent data, a borrower seeking a five-year fixed mortgage with a 15% down payment would now be looking at an average rate of 4.82%, down from 5.90% in October.
Real brokers said they are now seeing more buyers with increased confidence and greater choice, but with lowered budgets to account for borrowing rates.
Return Of First-Time Buyers
More sales are being agreed upon today than at the beginning of the year and in the months that followed September’s mini-Budget. The sharp rise in mortgage rates had the biggest impact on first-time buyers. But, those who can move and are on the market are now motivated to agree to a purchase. This is probably influenced in part by expensive and rising rents.
The fact that so many first-time buyers are moving forward with their purchases is encouraging for the housing market. Despite a slight decline in average mortgage rates, some first-time buyers will regretfully still be out of their price range. They could need to start looking for less expensive real estate, setting aside more money for a down payment, or increasing their monthly mortgage payments.
