The average price of a UK house listed for sale rose by £5,992 in January, reaching £366,189, according to Rightmove's latest house price index. This marks the largest increase at the start of
a year since 2020.
The rise in asking prices coincides with a surge in new sellers entering the market, with a record number listing their homes since Boxing Day. This has provided buyers with the widest selection of properties at the beginning of a year since 2015.
Buyer activity has also increased. Rightmove reports that inquiries from potential buyers since Boxing Day are 9% higher compared to the same period last year. Additionally, the number of sales agreed during this time has risen by 11%.
The high volume of new listings has given buyers more options but has also intensified competition among sellers. Rightmove cautions that overly ambitious pricing could leave some sellers struggling to secure a buyer, as properties with more competitive pricing are likely to attract greater interest.
"It's encouraging to see so many sellers confident enough to list their homes, offering buyers fresh options," said Colleen Babcock, a property expert at Rightmove. "However, with increased competition, sellers must work harder to stand out. This could mean setting an attractive asking price, highlighting standout features, or ensuring the property is immaculately presented. It's crucial for sellers to heed their agent's advice, especially on realistic pricing."
Impact of mortgage rates on the market
Mortgage rates continue to influence buyer affordability. According to Rightmove's weekly mortgage tracker, the average five-year fixed mortgage rate currently stands at 4.75%, only slightly lower than the 4.78% seen at this time last year. Meanwhile, the average two-year fixed rate has dipped marginally to 4.97% from 5.08%.
Fluctuating expectations about potential interest rate cuts from the Bank of England are also creating uncertainty, which may deter some buyers from entering the market despite the increased activity.
Market dynamics and affordability challenges
Although asking prices are on the rise, they remain £9,000 below the record high set in May 2024. This reflects ongoing affordability challenges for buyers, even as enthusiasm picks up in the new year.