Rise of 0.8% in property prices below March average as year-on-year increase drops sharply

The average price of a property in the UK rose 0.8% between February and March, according to Rightmove, helped by the sales of homes typically sold to first-time buyers. 

house prices

However, the online property portal said this is below the average 1% inflation seen in March in the last 20 years, and it saw annual house price growth fall to 3% this month, from 3.9% in February.

Rightmove said sales of first-time buyer-type properties this March were 18% behind the level seen in 2022, albeit only 4% behind the same period in the more normal market of 2019. Sales of larger homes lagged further behind, with sales of top-of-the-ladder and second-stepper homes sectors are 10% and 13% behind the same period in 2019 respectively.

However, Rightmove said there was overall a 6% increase in buyer demand compared to March 2019, and with properties of two bedrooms or less selling well in the past couple of weeks, prices did better than when they flatlined between January and February, the estate agent said.

This is despite the fact the first-time buyers market has been hit by the end of Help to Buy, which was due to finish at the end of this month but has recently had its deadline extended to the end of May.

Rightmove said a typical UK property sold for £2,906 more this month than last.

Tim Bannister, Rightmove’s director of property science, said: “Typical first-time buyer type properties (two-bedrooms and fewer) are leading a cautious recovery, with sales agreed in this sector improving fastest. 

“The result of this increased buyer activity means that average asking prices for first-time buyer type properties are now remarkably just £500 lower than their peak last year.”

He suggested: “Given the rising cost of living and increased cost of taking out a mortgage, it is likely that many in this group are getting some support from family or have been able to avoid record rents and saved up a larger deposit by living with parents for longer.”

Bannister also pointed out that although agreed sales in the past fortnight are just 4% below that of the same period in the more “normal” market of 2019, they are still 18% behind last year’s “exceptional” level. 

‘Top-of-the-ladder’ sales in the past two weeks are 10% behind the same period in 2018, and 13% behind the ‘second-stepper’ sector, Rightmove pointed out. Although, there had been a 1.2% monthly price jump in this ’top-of-the-ladder’ sector, which had pushed prices up, the agent stated. 

“Lagging sales agreed in the larger homes sectors are likely to be caused by a combination of factors including fewer pandemic-driven moves to bigger homes, a more cautious approach to trading up due to the cost of living, and even perhaps concern over the running costs of a larger home,” Bannister said. 

Rightmove noted mortgage rates had come down since 14-year-highs last year but, Bannister added, “market conditions are changeable, and we will need to see how the mortgage market reacts in the coming weeks”.

The Halifax this month suggested house prices had risen in February, although the Nationwide said they had fallen

In a forecast to accompany the Budget last week, the Office for Budget Responsibility said house prices were likely to drop 10% from the fourth quarter of last year to the third quarter of next year.