Limited number of available properties for sale prevents an even bigger fall
The average asking price of property coming to market fell by 1.9% to £364,895 this month – the sharpest drop in asking prices at this time of year since 2018, according to property listing platform Rightmove.
This year’s drop was noticeably larger than the usual price falls from August, which has an average drop of 0.9% due to the traditional summer market slowdown.
This, Rightmove said, indicates that some sellers are heeding their agents’ advice to price competitively in order to attract a buyer against the backdrop of holidays, cost-of-living pressures, and the highest Bank of England base rate since 2008.
Asking prices are now 2%, or £8,000, lower than at their peak in May. However, this is still 19%, or £59,000, higher than August 2019, highlighting the significant price growth over the past four years.
Buyer affordability is not only helped by sellers’ lower asking prices, but also by the downward trend in mortgage rates. The average five-year fixed mortgage rate is now 5.81%, down from 6.08% this time just three weeks ago, showing tentative signs of further improvement.
“There are still significant challenges in saving up enough for a deposit and affording higher mortgage payments,” Tim Bannister, director of property science at Rightmove, commented. “However, would-be buyers are now likely to see greater property choice in their area, and therefore a home more likely to suit their needs compared to during the pandemic.”
Bannister pointed out that while a 1.9% drop in just one month seemed dramatic, it was in part an expected seasonal drop as sellers coming to market realise that they had to compromise on price due to the traditionally quieter summer holiday period.
“Agents report that correctly priced homes in many areas are still attracting multiple prospective buyers competing to secure them, so if buyers see a home that could be for them and they can afford it, they may still need to act fast rather than sitting back,” he said.
The price fall could have been larger if not for the limited number of available properties for sale, which remains historically constrained and is currently 10% lower than in 2019, Rightmove revealed. Its latest Rightmove House Price Index also showed that the number of sales being agreed is now 15% lower than at this time in pre-pandemic 2019.
“While there is more choice, there is no glut of properties for sale, with the number of available properties still lower than at this time in 2019, and homes still selling more quickly, with the average time to find a buyer now 55 days, compared to 61 days in 2019,” Bannister noted.
Jeremy Leaf, a North London estate agent and former RICS residential chairman, added that despite the larger-than-expected drop in aspirational asking prices, it had not generated an increase in sales agreed, which remain disappointingly low.
“Realistically priced properties are still selling relatively quickly, particularly to ‘cash’ or equity-rich buyers, whereas those requiring reductions to attract more attention are sticking,” Leaf shared. “Certainly, continuing strong employment and slightly more stable mortgage rates are helping to revive interest despite holiday distractions.”
Tomer Aboody, director of property at lender MT Finance, agreed, saying that the lack of stock on the market is proving another stumbling block for would-be property purchasers.
“Although stock levels have improved slightly on last year, they are still below pre-pandemic levels, resulting in competition for the best properties at the correct price,” he stated.
Any thoughts on the findings of this month’s Rightmove House Price Index? Let us know by leaving a comment in the discussion box at the bottom of the page.
