The smallest February increase in home asking prices in 22 years

woman perusing a list of available homes

According to real estate website Rightmove, the average asking price for a home in the UK increased by just £14 from January to February. This is the smallest increase for a month since Rightmove started keeping records in 2001.

It stated that the current average asking price for a home is £362,452.

As sellers get ready for the spring selling season, asking prices typically increase at the beginning of the year.

Price tags do, however, change over time, and in some months last year, like November and December, they did go down.

Rightmove claimed that rising living expenses and mortgage rates were limiting what people could afford. It comes after months of declining home prices and forecasts for further drops this year and the following.

According to Tim Bannister, director of property science at Rightmove, "many sellers are breaking with tradition and showing unseasonal initial pricing restraint" regarding the most recent data.

Customers wanted "greater realism on price" and were taking more time to "find the right property at the right price," he continued.

According to building society Nationwide, up until January, home prices in the UK had been declining for five straight months.

In the meantime, annual house price growth decreased to 11% from 28% in December.

Higher mortgage rates, which have reduced purchasing power, are one factor. Rates are still significantly higher than they were a year ago, despite declining from the 6 point 65 percent highs seen after Liz Truss's mini-budget in September.

Average two-year and five-year fixed rate mortgages are still above five percent, according to the research firm Moneyfacts.

Inflation, which measures how quickly prices rise, is currently at a 40-year high, which is straining household budgets.

Rightmove claimed that buyers were still benefiting from "more choice, albeit with revised budgets to accommodate higher mortgage rates.".

The company reported that although the number of sales agreements was improving, they were still 11 percent below levels from 2019. When the mini-budget was implemented, they had fallen by 30%.

Additionally, the housing market has improved a little since Christmas, according to Knight Frank's head of UK residential research, Tom Bill.

Due to the volatility brought on by the mini-budget, buyers and sellers "switched off early for the holidays," but they returned surprisingly strongly in 2023, he claimed.

Given the strain on household budgets, Knight Frank anticipates a 5% decline in home prices this year.

Before prices start to rise again, the Office for Budget Responsibility, the government's official forecaster, expects a 9% decline in prices through the fall of 2024.

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