The average price of property coming to market rose by 0.9% (+£3,398) in October to a new record of £371,158 according to the latest index from property portal Rightmove, indicating that the shortage of property for sale continues to underpin prices.
While a new asking price record may seem surprising given the market uncertainty that followed the government’s mini budget in late September, it will take time for any impact to filter through to house prices.
There is also little sign of downwards price pressure on existing properties for sale, with the number of reductions up 2% on last month to 23% of all properties reduced, which is still much lower than the pre-pandemic five-year average of 32%.
Rightmove expects asking prices to drop in November and December as they normally do and says it will be important to distinguish these seasonal price changes from market changes caused by other factors.
Tim Bannister, Rightmove’s Director of Property Science, explains:
“What’s going to happen to house prices is understandably on the minds of many home-movers right now, especially following the market uncertainty after the government’s mini-budget. There has been no immediate effect on prices, but the trend of a slight softening in the pace of growth continues. New sellers coming to market in the month have been pricing strongly, and the number of homes that were already on the market seeing a reduction in price is still well below the long-term average. It will take a bit of time for the market to settle in to a new, more ‘normal’ level of activity following over two years of market frenzy, especially with new developments happening almost daily at the moment.”
The increase in average mortgage interest rates has expectedly caused some would-be home-movers to pause their plans, and overall demand went down by 15% in the last two weeks compared with the same two weeks last year. However, this is still 20% higher than the more normal market of 2019.
First-time buyers have undoubtedly been the hardest hit, and demand in the first-time buyer sector was down by 21% in the last two weeks compared to the same two weeks last year, though it is still up 24% compared to the more normal market of 2019.
Despite this, those who have already agreed their purchase are not losing their resolve, with only 3.1% of sales agreed falling through in the weeks following the mini budget, which is in line with the same period during 2019.
“The vast majority of buyers who had already agreed their purchase are still going ahead” Bannister said.“Some aspiring first-time buyers will have had their plans dashed by the sudden nature of the mortgage rate rises, and now face a difficult situation with rents also rising, and a shortage of available homes to rent.
“Buyer demand was already starting to soften and higher interest rates were anticipated, but they’ve been brought forward sharply due to market uncertainties. Agents report that many of those who managed to secure a mortgage offer at a lower rate before lenders quickly increased them are now rushing through their agreed deal to avoid their offer expiring and facing a higher rate when they come to reapply.”
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