Middle East battle hasn’t hit demand for purchasing properties, Rightmove says
- Asking prices increased in past month, the property portal has said
Demand for buying homes hasn’t fallen since the onset of the Iran war, Rightmove has claimed.
Its latest house price index, which covers the period from 8 February to 7 March, found that asking prices increased by £3,023 or 0.8 per cent to £371,042.
Rightmove said the number of sales being agreed was only 2 per cent behind the ‘strong market’ of this time last year, and 5 per cent ahead of 2024.
It added: ‘Buyer demand was already running lower than in last year’s busier market, but has fallen no further since the beginning of the Iran war’.
Rightmove added that competition to find a buyer was ‘fierce’ as a high number of properties are on the market.
The number of homes for sale remains at an eleven-year high for this time of year which is ‘limiting more significant price growth’ it said.
On the up: Mortgage rates are going up as lenders respond to war across the Middle East
North, Scotland and Wales see price growth
Rightmove said affordability remained a key driver of activity in what remained a ‘highly price-sensitive market’.
The lower‑priced North of England, Scotland and Wales has seen stronger annual price growth than the more expensive southern England, with the North West of England leading the way with a 2.6 per cent annual increase in prices compared to London’s 2.1 per cent fall.
Smaller studio to two bedroom properties, which are typical starter homes, have slipped in price by a national average of 0.4 per cent over the last year, it said.
By contrast, asking prices for middle market second-stepper homes were up 0.6 per cent over the same period, while large top-of-the-ladder homes remained flat.
Rightmove said: ‘Slight price falls for typical first homes may provide a window of opportunity for deposit-ready first-time buyers this spring, though saving up a deposit remains a challenge when average rents are near record levels and cost-of-living pressures persist.’
Tomer Aboody, director of specialist lender MT Finance, said: ‘The north-south divide illustrates how important affordability is when it comes to people’s ability to move house.
‘In the more expensive south, price growth is more muted as buyers face more of a struggle in raising the necessary deposit and demonstrating enough income to satisfy lenders.’
Mortgage rate rises continue
Although it said the Middle East conflict’s impact on the market had been minimal, Rightmove flagged ‘upwards pressure’ on mortgage rates, as lenders respond to mounting global uncertainty.
The property portal’s daily mortgage tracker showed the average two‑year fixed mortgage rate had risen to 4.51 per cent in the week starting 9 March, from 4.24 per cent the week before.
Other indexes put the figure higher, with rates scrutineer Moneyfacts saying the average rate on 13 March was 5.10 per cent.
‘This increase underlines how sensitive the mortgage market is to changes in inflation expectations and geopolitical risk’, Rightmove said.
Lenders are acting amid expectations of fewer interest rate cuts by the Bank of England, or perhaps even rates rising, due to the increased risk of inflation.
The Bank of England was expected to cut interest rates at its meeting next week before the start of the war, but it is now likely to delay this.
Colleen Babcock, property expert at Rightmove, said: ‘Market activity remains stable so far in March which is encouraging given the new global uncertainty over the last few weeks, though it’s too early to tell what may happen later down the line.’
She added: ‘It’s understandable that many potential buyers may have one eye on news about mortgage rates and wider household costs.
‘For context, the average monthly mortgage payment on a new purchase has increased by around £45 so far, but is still around £70 lower than it would have been at this time last year.’
