The latest research from Rightmove has revealed that the price of property coming to the market has witnessed its first fall this year, dropping 1.3% in the last month and taking the average house price in the UK to £365,173.
The South-East region specifically has seen a monthly decrease of 1.7% in houses prices but a year-on-year increase of 8%.
This house price fall follows successive interest rate rises by the Bank of England which have increased rates on new mortgages, however Rightmove suggests this seasonal drop is on a par with the average of 1.3% drop in August over the last 10 years, with summer holidays taking priority for many at this time of year.
Another key factor is sellers pricing more competitively in order to capture the attention of a suitable buyer quickly and attempt to beat the UK average time of 136 days to complete a sale and move before Christmas.
Rightmove’s Director of Property Science Tim Bannister comments:“A drop in asking prices is to be expected this month, as the market returns towards normal seasonal patterns after a frenzied two years, and many would-be home movers become distracted by the summer holidays. Indeed, for those that can, this may be their first summer holiday abroad since before the pandemic. Sellers who want or need to move quickly at this time of year tend to price competitively in order to find a suitable buyer fast, with some hoping to complete their move in time to enjoy Christmas in a new home. To achieve that this year, they’d need to beat the current average time between accepting an offer and completing the sale of four and a half months. Nevertheless, we’re still expecting price changes for the rest of the year to continue to follow the usual seasonal pattern, which means we’ll end year at around 7% annual growth, even with the wider economic uncertainty.”
August also marks 20 years since the first Rightmove House Price Index was published, with national average asking prices more than doubling in those 20 years (+134%), from £155,994 to £365,173, outstripping both average salary growth (+76%) and general inflation during this time period.
The sixth consecutive interest rate rise, this time by 0.5% to 1.75%, will no doubt be in the minds of many would-be home-movers. Together with the rising cost of living, it will lead to re-considerations of what they can afford to borrow and repay each month. Outside of seasonal trends, Rightmove identifies the mismatch between supply and demand as the key influence on August property prices. Although demand continues to soften, and supply constraints are improving, there is still a massive imbalance.
According to the property portal, although buyer demand this month is down 4% on the frenzied market of 2021, it is still 20% higher than in 2019. The number of new listings coming to market is up 12% on the same period last year, although it is 6% down on 2019, while available homes for sale are down 39% on 2019. Buyer enquiries to agents do not appear to have been particularly dented by the most recent interest rate rise, suggesting that many buyers are still committed to moving, and incorporating rate rises into their financial planning.
A combination of rising house prices and interest rates means that average monthly mortgage payments for new first-time buyers putting down a 10% deposit have now exceeded £1,000 for the first time, to reach £1,032. This is 27% higher than at the start of the year. Despite this challenge, demand for properties in the typical first-time buyer sector is 32% higher than at this time in 2019.
If you have any questions regarding the UK property market and how you can capitalise on today’s market, contact one of our property experts today. We’re here to help.
