Asking prices have risen again but the cost-of-living crisis coupled with increasing mortgage rates ‘will filter through to the market’ and keep the pace of house price growth in check, new data shows.

The average price of property coming to market has hit a new record for the fourth consecutive month, rising to £367,501, according to the latest figures from Rightmove.

This month’s increase of 2.1%, or £7,400, is the highest at this time of year since May 2014, and marks a national jump of £55,551 in asking prices in the two years since the housing market shut due to the pandemic.

This compares to a rise of £6,218 in asking prices in the two years before the pandemic, and illustrates how the frenzied market activity has led to two-year price growth in cash terms never before witnessed in over twenty years of tracking prices.

This fourth consecutive price record comes alongside a fourth successive interest rate rise, but this hike and other household economic concerns do not appear to have dented the motivation and urgency to move that are felt by many, just yet.

There are clear signs that the market is starting to ease. The number of buyers contacting estate agents is 14% down on the stamp-duty-fuelled market of this time last year, but is up by 31% on the more comparable market of 2019.

The number of properties available to buy is 55% down on the levels seen in 2019, meaning that supply and demand look likely to remain out of kilter for at least the rest of the year.

The number of sales agreed is up by 12% in the year to date compared to 2019 even with restricted choice, though is down 17% compared to the exceptional market of the same period last year. These numbers suggest that a lack of homes for sale rather than a lack of desire from buyers is what is dictating the pace of the market.

New stock is most urgently needed in the mid-market sector of two and three bedroom semi-detached homes, which are seeing the most competition from buyers.

Rightmove’s Tim Bannister commented: “People may be wondering why the housing market is seemingly running in the opposite direction to the wider economy at the moment. What the data is showing us right now is that those who have the ability to do so are prioritising their home and moving, and the imbalance between supply and demand  is supporting rising prices.

“Though demand is softening from the heady levels we saw this time last year, the number of buyers enquiring is still significantly higher than during the last ‘normal’ market of 2019, while the number of homes for them to choose from remains more constrained.

“We anticipate that the effects of the increased cost of living and rising interest rates will filter through to the market later in the year, and a combination of more supply of homes and people weighing up what they can afford  will help to moderate the market.”

As interest rates creep up, new Rightmove analysis tracks first-time buyer affordability over the last ten years. This month, average monthly mortgage payments reached £901, overtake average monthly rental payments of £887. However, the data shows that over the last ten years, the gap in payments has narrowed, meaning it is no longer notably cheaper to rent in terms of monthly outgoings.

This new affordability analysis is based on a household taking out a 90% loan-to-value mortgage, at the average two-year fixed interest rate, and looks at a typical first-time-buyer home of two bedrooms or fewer, and the average monthly equivalent rental payments.

The average monthly mortgage payment for a typical first-time-buyer home has increased by 13%, or £100, since December last year following four interest rate rises, although this is only 11%, or £87, higher than ten years ago. This may be surprising considering the strong house price growth over the last ten years, however it illustrates that a decade of historically low interest rates have effectively compensated for rising house prices in terms of monthly outgoings on a mortgage.

By contrast, equivalent monthly rental payments are 40% higher than ten years ago, as tenants feel the full effect of rising costs. Rents are currently rising at the fastest pace that Rightmove has ever recorded.

Monthly outgoings are only one part of the equation however, as the data also looks at the ability for a first-time buyer to borrow enough from a lender to purchase a first home. For a person looking to buy on their own, on the national average full-time salary, borrowing 4.5 times their income, ten years ago they would have needed to find a 25% deposit – £35,053 – to afford a typical first-time buyer home. Today they would need a 34% deposit, which equates to £74,402.

These are national averages and it will vary across the UK, however at a national level it means that a person buying on their own on an average salary, looking to buy an average first-time buyer home, now needs a deposit 112% higher than a decade ago.

This shows that while average monthly payments for a first-time buyer on their mortgage have remained relatively stable over time due to low interest rates, it has become more difficult to raise the increasingly large deposit needed to cover the gap between the price of a first home and what one can borrow.

Two people buying together on the average salary should still be able to afford a first-time buyer home if they have saved a 10% deposit, although that deposit size has increased from £14,269 to £22,312, a jump of 56%.

Bannister added: “This new analysis shows how it has become increasingly difficult for an average first-time buyer to afford a home on their own. The historic average mortgage payments for a first home provide some good context to the current backdrop of rising interest rates and help explain why so many people take out fixed-rate mortgages.

“As interest rates are predicted to rise further during the course of 2022, many buyers will be looking to lock in mortgage deals now before further rate rises. With so many variables affecting house prices and affordability, it’s a reminder that the market is extremely difficult to predict, and those looking to buy will be prioritising their own needs and what they can afford rather than waiting to try and time the market.”

Property industry reacts to Rightmove House Price Index