House prices hit new record as buyers rush to beat the banks

Sellers are taking advantage of an extreme shortage of homes up for sale, as well as buyers rushing to purchase before rising interest rates bring an end to the era of cheap debt. The Bank of England last week made its third consecutive increase to the Bank Rate since December, to 0.75pc.

The pace of the market is expected to cool in the second half of the year, according to Rightmove, as economic headwinds take their toll. It added that buyer demand also dipped initially in response to Russia’s invasion of Ukraine at the end of February, but has since stabilised.

Rightmove’s Tim Bannister said: “We’ve just seen interest rates rise again, and there are further incremental increases forecast for the year which will raise mortgage rates for some. Inflation and cost of living increases are also likely to affect buyer affordability and market sentiment.”

Asking prices rose 10.4pc year-on-year in March in the fastest rate of annual growth recorded in any month since June 2014.

There were more than twice as many buyers as sellers in March, the biggest mismatch between supply and demand in any spring. It led to more than one in five deals being agreed on Rightmove within the first week of marketing – the highest ever level, and twice the amount compared to the same period in 2019.

Growth in asking prices was strongest for larger homes with sellers adding £23,619 to the price tag of four-bedroom properties since February, a jump of 3.8pc.

Some, however, have simply become over confident. Mr Bannister said: “Agents report that despite the current high demand, a price reduction is often needed if a property has not found a buyer within the first two weeks.”

Meanwhile, there are signs the supply crunch has peaked. The number of new four-bed listings jumped 12pc compared to this time last year.

Kate Eales, of Strutt & Parker estate agents, said: “We are beginning to see incremental increases in the number of homes coming to the market as we enter spring.”

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