0:01 AM, 19th June 2023, About 2 years ago
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Average new seller asking prices fallen for the first time this year, the Rightmove House Price Index reveals.
New seller asking prices fell by £82 this month to £372,812.
The House Price Index for June reveals, despite increases in mortgage interest rates over the last few weeks, that buyer demand is holding steady but there is a slight impact on sales activity.
Buyer demand is 6% higher than the same period in 2019’s market.
The number of sales being agreed has dropped marginally, and is 6% behind the same period in 2019 compared to being 3% behind in May.
Tim Bannister, Rightmove’s director of property science, said: “Average new seller asking prices, the first and leading indicator of new trends in the market, have dropped slightly this month, signalling that the belated spring price bounce has quickly turned into an earlier than usual summer slowdown.
“Agents report that new sellers are sitting in two camps – those who still have over-optimistic price expectations following the buoyant pandemic market, and those who have adapted to the new conditions and are coming to market with a competitive price.
He added: “Sellers who price competitively are much more likely to find a suitable buyer quickly before their home appears stale, and they can often then negotiate on price on any onward purchase.”
The head of personal finance at Hargreaves Lansdown, Sarah Coles, said: “Sellers are determined to ignore the elephant in the room – even though it’s pinning would-be buyers to the ground, and squeezing the life out of the market.
“At the end of last week, the average two-year fixed rate mortgage was just shy of 6%, and there’s no sign of the hikes coming to a halt in the immediate future.
This could have a profound impact on buyers, who suddenly find they’re priced out of the market.”
She adds: “Plenty of sellers have refused to acknowledge this shift in the market and are still pricing their homes at an average of £372,812 – up 1.1% in a year.
“It remains to be seen whether they’ll find buyers at this level, or whether we’ll see prices cut as reality dawns.”
In the last four weeks, the average mortgage rate for a 5-year fixed 85% Loan-To-Value (LTV) mortgage has jumped from 4.56% to 5.20%.
This means that a new buyer purchasing a property at the current average asking price would now expect to pay an extra £117 per month if repaying the mortgage over a 25-year term.
More prospective buyers are checking their current affordability, with daily visits to Rightmove’s Mortgage in Principle service up by 53%.
With the Bank of England Base rate decision this week many buyers could face more uncertainty.
Mr Bannister says: “We expect that there may be more change to come depending on this week’s inflation figures and the Bank of England Base Rate decision.
“It is likely to feel very frantic for those taking out a mortgage right now, as they try to quickly lock in the best rate that they can find.
He added: “Although the impact of higher mortgage rates on activity levels has been limited so far, with prospective buyers who can still afford to move appearing determined to go ahead, it remains to be seen how movers will respond to the expected further rate rises.”
Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “As expected, recent mortgage market turbulence is dampening the increase in prices and activity which we would usually see at this time of year.
“However, these are, of course, only aspirational not achieved values.
“On the street, prices are softening as cash and equity-rich buyers in particular continue to hold sway over those relying on increasingly hard-to-obtain loans.”
He added: “Negative publicity is helping lower expectations and encourage more seller realism.”
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