House sellers cut prices to find buyers

The average asking price of new listings fell by 0.2% (-£905) in June, to £371,907 – when the market normally sees a 0% change for this time of year, data suggests.

According to Rightmove, the price drop reflects a move by sellers to attract buyers after recent interest rate hikes and the affordability challenges that buyers now face.

However, despite price cutting, house prices are still 2.6% higher than they were in January.

And buyer enquiries are 3% higher than in July 2019, before the pandemic disrupted the market.

Rightmove also says that the number of sales agreed in June was 12% lower than in 2019, suggesting that buyers are being more selective and cautious.

‘Interest-rate brakes are now beginning to bite in the housing market’

Tim Bannister, Rightmove’s director of property science, said: “The interest-rate brakes being applied more strongly to slow the economy 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 added: “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 over-priced and that they can still afford.”

Larger home sales are 14% lower than in 2019

Rightmove highlights that larger home sales are 14% lower than in 2019, and two-bedroom properties are 9% below those levels.

The data points to the market for first time buyers holding up as they try to escape ‘rents at record levels’.

The platform has also found a trend for homeowners to downsize as they retire early – probably to release equity to help pay for their lifestyle.

Rightmove says there’s no shortage of homes on sale, but sellers need to price their property at the right level to find a buyer.

‘Additional challenges for the market’

Mr Bannister said: “The continuing twists and turns of persistent inflation and higher mortgage rates have posed some additional challenges for the market.

“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.”

Share This Article