"Base rate hikes are now beginning to bite in the housing market"
The average price of property coming to market fell by £905 to £371,907 this month, with new sellers tempering their price expectations as a result of the recent base rate hikes by the Bank of England, as well as the increasing buyer affordability constraints, according to property listing platform Rightmove.
Despite this decrease, Rightmove noted that price trends have proved more resilient than many expected during the first half of the year, with average asking prices now 2.6% higher than in January.
Tim Bannister, director of property science at Rightmove, however, pointed out that the brakes on the economy being applied by the Bank of England “are now beginning to bite in the housing market.”
“While prices and sales bounced back this year much more strongly than most expected, the unexpectedly stubborn inflation figures and the surprise of further mortgage rate rises when many felt that they had stabilised, have contributed to the fall in prices and number of sales agreed,” he explained.
“However, buyer demand remains resilient at 3% above 2019’s more normal market levels, buoyed by a shortage of quality property for sale and ongoing housing needs. First-time buyers, trader-uppers and downsizers with higher deposits and lower mortgage requirements appear to be still keenly searching the market, not wanting to miss out on the right property that is not overpriced and that they can still afford.”
Rightmove, in its latest house price index, also reported that while sales levels eased, there was no glut of property choice, with the number of available properties for sale 12% lower than at the same time in 2019.
The latest snapshot from Rightmove’s mortgage tracker showed that the average rate for a five-year fixed, 85% loan-to-value (LTV) mortgage is now 5.69%, up by 0.49% compared to this time last month, but still below October’s 5.89% following the mini budget fallout.
“The continuing twists and turns of persistent inflation and higher mortgage rates have posed some additional challenges for the market,” Bannister commented. “Agents report that some movers are pausing until there is more certainty that mortgage rates have stabilised, as well as reviewing how higher costs affect their plans.
“However, there remains a large volume of motivated buyers who can factor rate rises into their budgets and are continuing to enquire about homes for sale, which is keeping the market functioning, albeit now with lower sales levels than at this time in 2019.
“Sellers who price right the first time, rather than starting with too high an asking price only to reduce later, have a much better chance of attracting one of these motivated buyers, and a good local agent will provide sellers with accurate evidence of prices that are being achieved in their area.”
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