House prices rise higher than expected in January alongside ‘pent-up’ buyer demand

The average price of a home jumped by £3,301 this month, at the same time as Rightmove saw double the amount of inquiries from prospective buyers.

Across Britain the average asking price is now £362,438, which is 0.9% higher than in December, Rightmove said.

It follows two months of falling prices, with January’s typical price tag still £8,720 lower than October’s peak.

Tim Bannister, Rightmove’s director of property science, said it was “particularly encouraging” for movers who are looking for a “calmer, more measured market” after the “chaotic economic climate of the final few months of last year”.

He added: “The early-bird sellers who are already on the market and have priced correctly are likely to reap the benefits of the bounce in buyer activity, while over-valuing sellers may get caught out as property stock builds over the next few weeks and months, and they experience more competition from other better-priced sellers in their area.”

Rightmove said the volume of prospective buyers sending inquiries to estate agents about homes is up 55% in the last two weeks, indicating pent-up demand.

Buyer demand is up 4% compared to the same period in the last “normal” pre-pandemic market of 2019.

However, it is still down by 36% compared to last year’s busiest-ever start to a year as the market navigates a more normal level of activity.

Meanwhile, on 5 January, the number of people requesting an estate agent to value their home was the third largest on Rightmove’s records.

Matthew Thompson, head of sales at Chestertons, said 2023 kicked off with a high demand “from buyers who no longer want to delay their search and want to benefit from a slightly better choice of mortgage products”.

He added: “This month so far, our branches noticed a 25% increase in viewings compared to January last year. Whilst buyer demand is strong, the number of market appraisals remains comparably low as some sellers are still observing how the market might be developing in the first quarter of this year.”

Number of homes for sale still down

However, even with the prospect of more sellers coming to the market, the number of available homes for sale is still below long-term norms, the website said.

Mr Bannister said: “We expect that the full effect of affordability constraints and last year’s mortgage rate rises will hold back some segments of the market in the first half of the year, but our leading market indicators may start to identify some green shoots of growth that will go on to strengthen in the second half of 2023.”