Whilst August is typically a quieter time of year with an average monthly price fall of 1.6% over the last 10 years, this is the largest decrease ever recorded by Rightmove at this time of year, and a lead indicator of a slower market in the second half of 2014.
The price fall has been exacerbated by London recording a 5.9% drop, which is the largest of three consecutive monthly falls.
Miles Shipside, Rightmove director and housing market analyst, said: “New seller asking prices are good lead indicators of the current mood of the market, and those who have put their property up for sale in the last month are obviously aware that potential buyers are thinner on the ground at this time of year and need to be tempted to act by cheaper prices.
“A drop in August is typical but it’s steeper than expected this year for two reasons. Firstly, both buyers and sellers are becoming increasingly aware about personal finances, given that the cost of mortgages are going up and regulators are trying to bring availability down.
“This limits what buyers are willing or able to pay, and helps moderate sellers price expectations. The second factor is the turnaround in London. Having forced national average prices up for the last two years, it’s now pushing them down with three falls in a row, and a real biggie this month. Holidays always cause a big price reverse in the capital, but there is also a massive year-on-year jump in the number of newly-marketed properties, up 20% compared to August last year, and double the figure seen in any other region. More sellers and fewer buyers mean price falls.”
Jeremy Duncombe, director Legal & General Mortgage Club, added: “The first six months of this year were characterised by rapid house price inflation.
“Since the start of the summer the pace of this growth has slowed, and we have now seen the first decline in house prices this year. Whilst this may help to keep prices more affordable, it shows there is still significant regional variation in the levels of growth and it is important that the fledging recovery in some areas is not affected by action to cool the market in London.
“Despite the lower than expected inflation report from the Bank of England last week there is still mounting speculation over when rates will rise.
“Our latest Mortgage Mood survey shows that 68% of homeowners think there is likely to be a rate rise in the next year.
“Bearing this in mind, borrowers need to start planning how they will cope with a rate rise now. Being prepared for a rise in mortgage repayments or talking to a broker now to lock in rates can help mitigate the shock of rate rises.”
