January market snapshot

Following two months of relatively modest falls, the average price of property coming to the market for sale rises again by 0.9% this month (+£3,301). Whilst a rise in asking prices is expected in January, this is the highest at this time of year since January 2020.

After the market’s uncertain final few months of 2022, this familiar seasonality is a tentative sign of stability, with new sellers feeling confident to test the market, albeit at average asking prices that are 2% below October 2022’s record. It’s still early days, but this is a more encouraging start to the year than many anticipated.

Headlines

Let's look at a few more headlines, followed by some further detail.

• After two months of falls, average new seller asking prices rise again by 0.9% (+£3,301) this month, the biggest increase at this time of year since 2020 as New Year sellers test the market

• However, average asking prices are still £8,720 lower than their peak in October 2022

• The number of prospective buyers contacting estate agents is up 4% compared to the same period in 2019, and up by 55% compared with the two weeks before Christmas, the biggest New Year bounce since 2016 after the extended lull at the end of the year

• Would-be sellers jump into action with 5th January the third busiest day ever for people asking agents to come out and value their home, an early sign of confidence for the year ahead

• Average monthly mortgage payments for first-time buyers continue to fall as mortgage interest rates soften, with some deals now on offer below 5%

“The seasonal increase in new seller asking prices this January from December is particularly encouraging for movers who are looking for the reassurance of familiar trends and a calmer, more measured market after the rapidly changing and at times chaotic economic climate of the final few months of last year. However, while average asking prices did rise in January, they are still £8,720 less than their peak in October. The early-bird sellers who are already on the market and have priced correctly are likely to reap the benefits of the bounce in buyer activity, while over-valuing sellers may get caught out as property stock builds over the next few weeks and months, and they experience more competition from other better-priced sellers in their area. It will be important for the vast majority of sellers to remember that a drop in your asking price is likely not an actual loss compared with what you paid for it, only a failure to live up to aspirations. Listening to your estate agent’s advice about your hyper-local market and pricing right the first time can avoid a stale sale and the need for even greater reductions later.” Tim Bannister Rightmove’s Director of Property Science

Economy

The UK economy unexpectedly grew by 0.1% in November, as the World Cup helped boost growth in tech and service sector industries. However, more broadly GDP fell by 0.3% in the three months to November (ONS). The rate of inflation slowed slightly in the year to November to 10.7% from 11.1% in October but the cost of living remains high. The drop was mainly due to falling fuel prices.

Fixed-rate mortgage rates are plummeting as Gilt yields have fallen. Unemployment remains ultra low. Wholesale gas prices have all but returned to pre-Ukraine invasion levels. Electricity bills will now fall. Therefore inflation has probably peaked.  

Prices



Demand

"Given that the pause for Christmas came unexpectedly early last year, it was important to see whether buyers and sellers would pick up their plans again at the beginning of this year, or wait to see what the first few months might bring. The numbers certainly suggest that activity has bounced back after Christmas and agents will now be busy trying to match the likely revised expectations of buyers and sellers as we move towards the important spring season.”
Tim Bannister Rightmove’s Director of Property Science

The number of prospective buyers at the start of 2023 is up 4% on 2019 and up 55% compared with the two weeks before Christmas. However, enquiries are down a third from a year ago according to Rightmove. First-time buyers accounted for 53% of all house purchasers with a mortgage in 2022, up from 50% in 2021. The Yorkshire Building Society estimate there were 370,287 FTB purchases in 2021, a 9% fall from 2022 but 5% higher than in 2019. The average interest rate paid on new mortgages rose 26 base points to 3.35% in November (Bank of England) but are now falling.

All of our offices across Bristol have returned to an upbeat market, perhaps more so than we may have expected. The sales activity immediately following the Christmas holidays has certainly proven to keep us busy. Many people feel able to look ahead and put their moving plans into action for the new year, all be it cautiously. As mortgage rates start to lower and inflation is taken under control, we are also seeing renewed interest from buyers and improving demand from those who’ve taken a long-term view to invest in their next home. 

Many of our sellers are taking a more realistic approach to actual asking prices, reflecting the changing market conditions and knowing the reduced asking price is likely reflected in their ongoing purchase of course. This puts them in a strong position to secure an earlier sale. 

For us, this means we continue hiring new staff across our sales, lettings and conveyancing teams, maintain investment in new technology and our team's training and development in 2023. And look forward to another busy year helping people with their home move journeys.

As always, our teams are here to help in every way possible, get in touch with any questions or concerns. 

Sources: Rightmove, Zoopla, Dataloft, Land Registry, National House Price Index, DLUHC

Mon 16 Jan 2023