Average new seller asking prices remain flat this month, rising by just £14 (+0.0%), the smallest ever increase from January to February and a sign that more sellers are heeding their agents’ advice to price right first time

• Increasing numbers of buyers are returning, with the market starting 2023 much better than many expected:

• The latest snapshot of buyer demand shows the number of people contacting agents is up by 11% in the last two weeks compared with the same period in 2019’s more normal market

• The number of sales agreed continues to rebound, and is now just 11% down on 2019’s levels, recovering from 15% down at the start of the year, and 30% down in the aftermath of the mini-budget

• Average rates for a 15% deposit five-year fixed mortgage are now 4.82%, down from October’s 5.90%

• While there is still an overall shortage of property for sale, down by 24% compared to 2019, there is more choice for buyers than a year ago, giving prospective buyers confidence for their onward move

• The latest sales agreed figures show that surprisingly it is the first-time buyer sector that is recovering better than the discretionary upper-end sector

The average price of property coming to the market rises by just £14 this month (+0.0%) to £362,452. This is the smallest increase from January to February on record, though prices remaining flat rather than falling as some expected could be seen as a positive indicator for the year ahead. However, reflecting the slower market conditions new sellers have broken with tradition and held prices static for the first time ever at this time of year rather than increase them. Transitions from a fast to a slower-paced market have historically had many different paths, and whilst it’s early days the combination of sellers being more realistic on price and an improving picture on the number of sales being agreed suggests a softer landing for the market than many expected.

Though it is still very early in the year, this month’s key metrics suggest that many buyers are seeing reasons to get on with their moves, and have the confidence to return to a market which, so far, is stronger than many expected. The number of potential buyers contacting agents is up by 11% in the last two weeks compared with the same period in 2019. This demand is beginning to translate into sales, as the number of sales agreed is now just 11% down on the same period in 2019’s more normal market, picking up from 15% down at the start of the year and vastly improved from 30% down in the aftermath of September’s mini-Budget. This is quite a remarkable turnaround given the rapid increase in mortgage rates less than six months ago. Perhaps even more surprisingly, it is sales in the first-time buyer sector which are holding up most strongly and are down only 7% on 2019. This suggests that though the first-time buyer sector has been hardest hit in terms of the number of buyers enquiring, those who are in the market and able to move are motivated to agree a purchase, likely driven in part by high and increasing rents, and a continued desire to own their own home. Conversely and an indication of hyper-local and sector differences, sales in the top-of-the-ladder sector are down by 16% in the first two weeks of February compared with the same time in 2019.

Affordability trends

The first-time buyer monthly mortgage payment is based on Bank of England data of the averages for 90% LTV two year fixed mortgages from lenders, and the average asking price of a typical first-time buyer home (two bedrooms or fewer) using the Rightmove House Price Index. The equivalent monthly rent is calculated using the same property types (two bedrooms or fewer). The affordability to buy a first home is based on the Average Weekly Earnings (AWE) dataset from ONS multiplied by 4.5 to get the typical maximum that a person can borrow from a lender. The average asking price of a typical first-time buyer home is taken from the Rightmove House Price Index.

Regional trends