A rebound in the market for large family homes helped property asking prices rise for the fourth consecutive month, according to Rightmove.
The price of the average newly-listed property rose by 1.1 per cent or £4,207 in April to £372,324.
And the property website said a driving factor behind the current growth was sales of larger homes at the top of the ladder, where asking prices leapt 2.7 per cent in a month and are rising at the fastest pace seen since 2014.
The latest increase means the average newly listed property has gone up in price by 1.7 per cent since April 2023, and is only £570 below the peak in asking prices recorded in May last year.
On the up: The average asking price is now up 1.7% compared to a year ago and only £570 short of the peak recorded in May 2023
This means prices are rising more slowly in the more mortgage dependent first-time buyer and second-stepper sectors.
Rightmove is also reporting a far busier start to the year than it saw in the first four months of 2023.
The number of new sellers coming to market is up 12 per cent compared to this time a year ago, while the number of sales being agreed is up by 13 per cent.
However, once again a lot of the activity is coming in the top-of-the-ladder sector, which is comprised of four-bed and five-bed properties.
The number of new sellers in this sector is up by 18 per cent compared to this time last year, and the number of sales agreed is up 20 per cent.
Estate agents say the increased choice in the larger homes sector is encouraging previously reticent homeowners to come to market, creating a cycle of more new listings leading to more sales activity.
Fourth month in a row: The average asking price of property coming to the market rises by 1.1% (£4,207) this month to £372,324
In the more mortgage-dependent first-time buyer market, the number of new sellers is up by 10 per cent, and number of sales agreed is up by a more modest 9 per cent.
Mortgage rates have not fallen as much as some people were expecting at the start of the year and recently rates have been edging up.
Since the start of February the average two-year fixed rate mortgage has risen from 5.56 per cent to 5.81 per cent, according to Moneyfacts.
Meanwhile, the average five-year fix has risen from 5.18 per cent to 5.38 per cent.
The biggest growth in activity is taking place in the largest homes, according to Rightmove
Tim Bannister, a property expert at Rightmove said: ‘The top-of-the-ladder sector continues to drive pricing activity at the start of the year, with movers in this sector typically less sensitive to higher mortgage rates, and more equity rich, contributing to their ability to move.
‘While some buyers, across all sectors, will feel that their affordability has improved compared to last year due to wage growth and stable house prices, others will be more impacted by cost-of-living challenges and stickier than expected high mortgage rates.
Jeremy Leaf, north London estate agent and a former Rics residential chairman says buyers are negotiating hard
‘Despite these factors, it has been a positive start to the year in comparison to the more muted start to 2023.
‘However, agents report that the market remains very price-sensitive, and despite the current optimism, these are not the conditions to support substantial price growth.’
Jeremy Leaf, north London estate agent and a former Rics residential chairman, added: ‘The market continues to play catch-up as the increase in new enquiries is emboldening sellers, not only to make their properties available but chance their arm at higher asking figures.
‘The prospect of more stable or even falling mortgage rates is certainly helping to improve confidence generally.
‘However, the uplift in supply has meant more choice so the market remains price sensitive and buyers are negotiating hard, particularly those dependent on little or no finance.’
What next for mortgage rates?
At present, it doesn’t look like mortgage rates are going to fall dramatically any time soon.
That’s despite markets anticipating three base rate cuts by the Bank of England before the end of this year.
Fixed rate mortgage pricing is reflected in Sonia swap rates. Mortgage lenders enter into these agreements to shield themselves against the interest rate risk involved with lending fixed rate mortgages.
Put more simply, Sonia swap rates show what lenders think the future holds concerning interest rates and this governs their pricing.
This means current mortgage rates have already baked in future interest rate falls to some extent.
From a historical perspective, it is also very rare for the lowest priced fixed mortgage rates to go below the equivalent swap rates.
Back on the up: Since the start of February the average two-year fixed rate mortgage has risen from 5.56% to 5.81% according to Moneyfacts
At present, the lowest five-year fixes are around 4.2 per cent and the lowest two-year fixes are around 4.6 per cent.
As of 17 April, five-year swaps were at 4.13 per cent and two-year swaps were at 4.67 per cent – both trending below the current base rate and broadly in line with whether the cheapest fixed rate deals are at the moment.
Nicholas Mendes, mortgage technical manager at broker John Charcol said: ‘The market is in dire need of some positive movement from the Bank of England, until we see a rate reduction we’re going to see a period of rate increases as markets start to be unsettled.
‘Mortgage holders coming to the end of their fixed deals this year and in early 2025 will need to be prepared to see rates higher than in earlier predictions.
‘Initial forecasts of a 3.5 per cent fixed rate by August to late September are very unlikely, with any sign of such a deal now pushed back to later in the year.’
What next for the property market?
Overall, the number of sales being agreed is now level with 2019 despite the higher mortgage rates, according to Rightmove.
This may be partly because peoples wages have risen in recent years.
Nicholas Mendes, mortgage technical manager at John Charcol says the mortgage market is in ‘dire need’ of some positive movement from the Bank of England
While average property prices are 22 per cent higher than in 2019, according to Rightmove, affordability has been helped by average wage growth of 27 per cent over this time-period, slightly ahead of house price growth.
Andrew Wishart, senior economist at Capital Economics said: ‘The slight rise in mortgage rates since the start of the year is likely to mean house prices stall in the near term.
‘While the house price-to-earnings-ratio has returned to its 2019 level thanks to strong pay growth and a dip in house prices, higher rates mean that buying a home with a mortgage is still more expensive by past standards.’
However, according to Wishart, house prices will soon start to rise again. Capital Economics is forecasting that house prices will finish the year 3 per cent up and then rise by a further 5 per cent in 2025.
‘Lower inflation and significant base rate cuts mean mortgage rates should fall substantially in 2025,’ added Wishart.
‘And as borrowers seem content to borrow over longer periods and spend more on repayments, that is likely to push prices up further.’
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