The average price of property coming to market increased slightly by 0.4%, or £1,386 last month, to £366,281, lower than is usual for this time of year, as higher interest rates continue to add to buyer affordability constraints.
The data, provided by Rightmove, suggests that it has been a slower than usual August, following 14 consecutive Bank of England interest rate rises.
The research also found that more than a third of properties currently for sale have had a price reduction, with the average equating to £22,700 nationally (6.2%).
Industry reactions:
Tom Bill, head of UK residential research at Knight Frank commented, “The bank rate is approaching its peak as the autumn season gets underway for the UK housing market, which is good timing. The bad news is that buyer confidence has been badly damaged by the volatility of the last 12 months.
“A strong jobs market, lender flexibility and the prevalence of fixed-rate deals in recent years will all curb price declines but stability is needed to improve sentiment, which is the all-important lubricant in the housing market. Even once rates peak, the adjustment to higher borrowing costs and the looming general election mean that we don’t expect a housing market firing on all cylinders. We don’t anticipate a cliff-edge moment for prices but a single-digit decline this year is likely to be repeated next year.”
Andy McHugo, director at McHugo Homes, said: “In almost twenty years of selling homes I feel that this summer and last summer have been the most subdued, perhaps due to the impact of not being able to travel in the summers of 2020 and 2021, but obviously with the current economic backdrop also.
“Encouragingly, since the start of September we’ve seen an upturn in enquiries as more home-owners have been motivated to step out into the market place, which should help translate into sales over the coming weeks and months.”
Jeremy Leaf, north London estate agent, commented: “The only surprise for me is that the drop in prices is not larger.
“These are, of course, asking not selling prices but recent relentless rises in interest rates and fear of more to come have had an inevitable knock-on effect on present and future activity.
“We are finding in our offices that sellers with unrealistic expectations often end up not just with a lower price but have to accept below the level they were advised initially.
“Fortunately, in recent weeks, an expectation that interest rates may be at or near their peak coinciding with a return from summer holidays for many has prompted a welcome albeit modest uptick in appraisals, listings and buyer interest. This is particularly the case in those properties offered by motivated sellers.”
Adam Feather, managing director of Robert Anthony Estate Agents, said: “With fewer properties changing hands, as increasing mortgage borrowing costs put greater pressure on people’s finances, house prices will almost certainly fall further over the next few months, which is why sellers need to be realistic with their expectations when listing their property for sale.”
Tomer Aboody, director of property lender MT Finance, said: “With non-stop interest rates rises over the past 14 months, this lull is inevitable. The government and Bank of England have forced the market into hibernation.
“Although August was subdued and activity down considerably compared with 2019, September has seen an uptick in transactions, with buyers concluding that the market will continue in this manner for a while so they need to bite the bullet and get on with moving. Thankfully mortgage rates are coming down, making buying more affordable.
“At some point the rate rises have to stop, allowing the market to breathe and take stock. This will, in turn, lead to a return of some confidence, which will translate into more transactions. Let’s hope this comes sooner rather than later.”
