Asking costs rise over £9,000 in a MONTH… however a 3rd of sellers are being pressured to chop them in a while

House asking prices saw the largest spike in any month since 2015 in January, new data from Rightmove suggests.  

The average price of homes coming to the market for sale rises in January to £368,031, a 2.8 per cent increase from December and a cash increase of £9,893.

This is the largest price increase seen in the month of January since Rightmove’s records started 25 years ago, it said, and the largest of any month since June 2015. 

Most locations saw asking prices increase this month, but the East Midlands and Scotland bucked the trend, experiencing a drop.

In the North East of England, average asking prices surged 7 per cent month-on month to £197,264, while the East of England saw a 3 per cent month-on-month rise to £412,555. 

National average property prices are now 0.5 per cent higher than at the same point a year ago. 

However, the property market is tough for sellers at the moment, and there is evidence many are cutting their asking price to entice buyers. 

The number of homes listed is the highest it has been at this time of year since 2014, Rightmove said, and a third of homes currently on the market have seen a price reduction.

Colleen Babcock, a property expert at Rightmove, said: ‘Sellers need to be realistic and balance the price they want to achieve with the likelihood of being able to find a buyer in their local market at that price.’

Jeremy Leaf, a north London estate agent and a former Rics residential chairman, told This is Money: ‘Although these are of course asking – not selling – prices of newly listed homes, activity is definitely “on the up” buoyed by falling mortgage rates and inflation.

‘However, sellers should not get too carried away. The amount of new and existing stock – especially flats – as well as underlying worries about employment prospects are keeping a lid on more significant price rises.’

Average asking prices for first-time buyers, second steppers and the top of the market are £225,544, £341,131 and £658,658 respectively, Rightmove said. 

Myles Moloney, a director at Chase Buchanan Estate Agents in London, said: ‘We have seen a big uplift at the start of this year in family home buyers who are moving for the second or third time.’

In the two weeks post-Christmas, buyer demand rose by 57 per cent compared to the two weeks before Christmas, while the number of newly-listed homes for sale jumped by 81 per cent, according to Rightmove.

What is happening to mortgage rates?     

Mortgage lenders are reducing their rates, partly to encourage new customers in a housing market which is relatively sluggish. 

The average two-year fixed mortgage rate has fallen to its lowest since before September 2022’s mini-Budget, at 4.29 per cent, compared with 5.03 per cent a year ago. 

This week, Nationwide cut its mortgage rates for first-time buyers and home movers. 

It made cuts of up to 0.20 percentage points for both new and existing customers, and the new rates included some market best-buys.

Nationwide’s lowest two-year fixed rate is 3.5 per cent for home movers buying with at least a 40 per cent deposit, though the deal does come with a hefty £1,499 fee.

On a £200,000 mortgage being repaid over 25 years that would mean paying £1,002 a month.

However, there may not be much further for them to fall.  

Matt Smith, Rightmove’s mortgage expert, said: ‘The financial markets are currently expecting no more rate cuts until the second quarter of the year, with the Bank of England Base Rate likely to be held during the next rate decision in February.

‘Mortgage rates are therefore likely to be steady for the next few months, with only minor changes up or down. 

‘Those who have been waiting for cheaper mortgage rates before acting might currently be seeing some of the best deals that will be around for a while.’