While larger homes took considerably longer to sell on average, smaller homes have fared better, with last month marking the first May since 2010 when two-bedroom homes sold quicker than three-bedroom properties.
The average two-bedroom home went under offer within 43 days, three days faster than the average three-bedroom unit.
The data, provided by Hamptons, part of Connells, shows that the average seller in England and Wales achieved 99.1% of their asking price in May, the highest share since October 2022.
This represented the third strongest May for asking versus achieved prices since records began in 2009, when Hamptons was still part of the Countrywide Group, before the business was sold to Connells in 2021.
In terms of asking pricing, one- and two-bedroom homes have seen the smallest year-on-year falls in relation to achieved pricing, with larger homes bearing the brunt of the affordability pressures.
Sellers of smaller homes are also accepting offers closer to their asking price than they were pre-Covid (May 2019).
Despite a weaker market, there are still five regions in England & Wales where the average seller achieved more than 100% of their asking price on average last month. However, the South West and North East have recorded the biggest annual decline in achieved pricing.
While bidding wars are less common than last year for most homes, competition amongst buyers has increased for studio and one-bed properties.
Some 27% of studio and one-bedroom homes sold last month had three or more competing offers, 1% up compared to May 2022. Overall, the share of homes sold following a bidding war fell year-on-year, but they remain more common than pre-Covid.
Aneisha Beveridge, head of research at Hamptons, said: “One of the early underlying trends of 2023 and a direct effect of higher mortgage rates has been strengthening demand for smaller homes. With affordability stretched, first-time buyers are buying smaller and so too are early downsizers with the aim to pay off their existing mortgage. This is supporting pricing for one and two bed homes, while the larger family home market has cooled more over the last year given how costly it is to trade-up.
“Most of our metrics are back to tracking 2019 levels and have continuously improved throughout the year as falling mortgage rates lifted confidence for both buyers and sellers. However, upward pressure on mortgage rates over the two weeks runs the risk of freezing some buyers out of the market. Although, rates are unlikely to return to their Q4 2022 peak which means that we don’t expect a significant change in the market in the months ahead.”