The upward trend in what buyers were prepared to pay continued in January, following falls late last year, according to the latest housing market insight and data from Hamptons.

Last month, the average seller in England and Wales achieved 98.8% of their asking price up from 98.6% in November 2022 following the mini-budget. This marked the second consecutive month of improvement.

While fewer homes are selling above their asking price than this time last year (25% versus 38%), pricing remains robust compared to historic standards. January 2023 saw the second highest share of homes sell above asking price than in any January since our records began in 2009. To put this figure into context, back in January 2009, when prices were falling sharply, just 9% of homes sold above their asking price.

Since the rise of mortgage rates in the wake of September’s mini-Budget, sellers have adjusted the pricing of their homes to reflect new economic realities. Homes sold in January 2023 that were listed for sale in September 2022 achieved on average 98.0% of their asking price. However, homes that came onto the market in December 2022 and sold in January 2023 achieved 99.9% of their asking price on average.

Aneisha Beveridge, head of research at Hamptons, commented: “January typically sets the tone for the year ahead, providing a bellwether for the housing market. And last month was no different. Our key leading indicators for January showed green shoots of recovery for the second month running, painting a less gloomy picture than some seem to believe.

“Falling mortgage rates are undoubtedly helping affordability. And buyers, many of whom postponed moves in October and November when rates spiked, seemed more confident re-entering the market in the New Year.”

London is leading this resilience. The average home sold in the capital last month achieved 98.2% of its asking price, up from 96.8% in December which marked the lowest level since May 2020. With mortgage rates falling, helping affordability, most of this uptick came from smaller homes at the lower end of the market.

Hamptons says that homes priced below £500,000 in London achieved 99.5% of their asking price on average in January up from 98.7% in December. Meanwhile £500k+ homes remain more price sensitive, partly because a higher share came onto the market before the mini-Budget and typically take longer to sell.

For the last 11 months price reductions have been on the rise. In January 2023, 45% of homes sold followed a price reduction of at least £1, up from 28% in January 2022.

However, with sentiment settling and a higher share of homes coming onto the market priced in-line with current conditions, we may have seen price reduction levels pass their peak. Of the homes sold in January following a price reduction, 47% came onto the market before October.

For reference, the share of homes sold following a price reduction averaged 41% between 2016-2019.

In the face of rising interest rates and buyers’ stretched affordability, sellers at the top-end of the market have been under increasing pressure to review the price they were originally asking for their home. 58% of homes sold for over £1m in January had a sale agreed following a price reduction.

Beveridge added: “While the hangover from the mini-Budget continues to weigh on price reductions and the time taken to sell homes, these figures may strengthen as we head into spring with new sellers coming onto the market more likely to price their homes to suit the current economic conditions.”

The latest figures from Hamptons also reveal that it typically takes longer to sell a home in January than any other month. This is because many homes have been on the market over the quiet festive period.

But this has been exacerbated this year due to the October – November lull which meant that homes in January were selling slower than the same time last year.

Across Great Britain the average property took an average of 81 days from listing to an offer being accepted, this is 28 days slower than last year which was the fastest January on record to sell. Compared to before the pandemic, however, time to sell was only seven days slower than January 2019.

Time to sell rose more slowly in London than anywhere else. But even so, the average home in the capital still took 14 days longer to sell than this time last year.

The largest differentiator for time to sell came from a home’s asking price. £1m+ homes bucked the trend and saw a marginal decrease in time to sell compared to last year, dropping by a day to average 92 days. In contrast, the time it took to sell a home under £250k increased 29 days year-on-year to average 80 days in January, and those between £250k and £500k saw a 34-day increase.

The proportion of homes sold with three or more offers jumped in January, up 8% on December 2022. This meant that 39% of homes sold across Great Britain were sold following a bidding war bringing it back in line with the average over the past two years (38%). This increase in buyer competition has been driven largely by improved affordability, particularly from first-time buyers.

The increase in bidding wars was mainly driven by more desirable larger homes. Two and three beds saw the biggest monthly increases (+8%). Four-beds also saw competitive bidding rise by 3%, whereas one-beds recorded a 1% fall.