The UK housing market is abuzz with excitement as the latest data reveals an extraordinary surge in residential property prices and market activity. Here's what you need to know about the UK House Price Index for May 2023:

Prices Reach New Heights: In a delayed response to the remarkable level of market activity since the beginning of the year, the average price of properties coming to the market has skyrocketed by 1.8% (+£6,647) this month. This significant increase propels the average property price to a staggering new record of £372,894. Surpassing the historical average May rise of 1.0%, this 1.8% monthly jump is the largest of the year so far.

Market Resilience: Agreed sales numbers are trailing just 3% behind the more normal pre-pandemic market of 2019, signalling the remarkable resilience of the housing market. Despite the challenges of the past, the market is bouncing back with force.

Steady Asking Price Discounts: The discount from the final asking price to the agreed sale price has stabilised at an average of 3.1%, aligning with normal market levels. This stability reflects the growing confidence of home movers in the market's future outlook.

Market Segment Insights: While increased price confidence is primarily observed in the lower and middle market sectors, there are some indications of over-optimism in the top-of-the-ladder sector. Discretionary buyers in this sector are exhibiting caution, resulting in a 1% lower buyer demand compared to pre-pandemic levels. In contrast, second-stepper properties are experiencing a 3% increase in demand, and the first-time buyer sector enjoys a robust 6% surge.

Steady Mortgage Rates: Despite another increase in the Bank of England base rate, average mortgage rates remain stable. An average 5-year fixed, 15% deposit mortgage currently stands at 4.56%, down from 5.89% in October. This stability in rates helps home-movers better understand and plan for their mortgage expenses.

According to Tim Bannister, Rightmove's Director of Property Science, this month's strong surge in new seller asking prices is a belated reaction and a sign of increasing confidence from sellers. The market's transition to a more normal activity level is well underway, defying earlier gloomy predictions. Steadying mortgage rates and a positive economic outlook contribute to sellers' growing confidence.

Although the market remains price-sensitive, the current record-breaking prices demonstrate sellers' justified confidence in some market segments. However, it's important for sellers to set realistic prices from the outset to avoid hindering their chances of a sale.

The average discount from the final asking price to the agreed sale price remains stable, reflecting home-mover confidence in the more normal market conditions this year. The number of buyers enquiring about homes for sale is 3% higher compared to the pre-pandemic market of 2019. While the top-of-the-ladder sector experiences some over-optimism, properties in this segment are still selling faster than in 2019, albeit with an increased average time of 67 days to agree on a sale.

Steadying mortgage rates contribute to greater home-mover confidence, allowing for better planning of expected mortgage costs.