UK house sales back to pre-Covid levels - Rightmove

UK home sales in March have rebounded close to pre-Covid pandemic levels, driven by demand for flats and a recovery from the market slump last September caused by the disastrous mini-budget of former prime minister Liz Truss, according to real estate agent Rightmove.

A survey by the property website released on Wednesday showed the number of sales agreed between sellers and buyers was just 1% lower than March 2019 as loan costs fell after Truss’s £44bn plan of unfunded tax cuts caused market turmoil and saw thousands of mortgages pulled by lenders.

"The market is remaining surprisingly robust given the economic headwinds that have affected movers over the last six months," said Rightmove property expert Tim Bannister.

Agreed sales of flats were now 10% above 2019 after being 11% down at the start of the year. London saw the most pronounced recovery in the broader market, with overall agreed sales increasing 11% compared to March 2019, and agreed sales of apartments 23% higher.

However, while the total number of agreed sales had improved from being 21% below 2019 levels as recently as January, they were still down 18% year on year.

Buyers are grappling with a cost-of-living crisis that has seen inflation hit 10.4% and a succession of interest rate increases going to back to December 2021, leading to higher borrowing costs..

Real estate agents noted a "significant upswing" in buyer demand for apartments of all sizes, with agreed sales rising 10% from 2019, up from a fall of 11% at the start of 2023.

Average mortgage rates have edged down this year. The average mortgage rate for a five-year fixed, 15% deposit mortgage was 4.63% in March, down from 5.89% in October.

The average size of price reduction rose to 6%, or £22,000, based on the current national average asking price of £365,357, Rightmove said.

Robert Sturges, central London area director at estate agents Chestertons, said demand for flats was being driven by commuters looking to move closer to their work, parents investing for their children and overseas buyers taking advantage of favourable currency exchange rates.

"In the face of rising living costs, some buyers may also decide that a flat is financially more viable than a house at this moment in time," he said.

Victoria Scholar, head of investment at Interactive Investor said: "The market has been recovering since the turmoil around the mini-budget last year which sent mortgage rates temporarily sharply higher. Reduced asking prices have helped to generate a pickup in sales, with particular strength in the British capital thanks to strong demand from workers and overseas buyers for London apartments."

"With the housing market likely to cool further this year, and the Bank of England nearing the peak of the rate hiking cycle, we could see more buyers return to the market, as the recent headwinds which have stymied transactional activity subside."

Reporting by Frank Prenesti for Sharecast.com