Property asking prices have tumbled by 1.9%, the biggest fall in August since 2018, the latest data from Rightmove has revealed.
Sellers are being forced to lower prices in a bid to attract buyers who are distracted by summer holidays and also fearful of making a move due to high inflation and interest rates hitting a 15-year peak.
It has meant the average asking price on the website has fallen by just over £7,000 to £364,895.
Whilst it’s not so positive for sellers, the data will come as good news for buyers, who will now benefit from better affordability at a time when average earnings are increasing and mortgage rates are starting to fall. It also means they have a greater choice of properties from which to choose.
But, Rightmove reported, average house prices were still £59,000 – or 19% – higher than in the pre-pandemic market of August 2019.
What’s more, it revealed the number of home sales being agreed was 15% lower than in 2019 which was considered to be a ‘normal’ market.
Vicki Foreman, associate partner at Brown & Co estate agent in Norfolk, said: “It really is a two-speed market right now. In the current price-sensitive market, homes which are overpriced compared to local trends really stand out from the crowd for the wrong reasons and have the real risk of going stale or may have already done so.
“On the other side, there is still a healthy level of buyer interest for well-priced new instructions, with recent news around mortgage rates giving some renewed optimism.”
She added: “Pricing right really is key – get it right from the start and sellers could be looking at several prospective buyers to choose from. If sellers are too overoptimistic at the beginning, it can be difficult to regain interest in the property even when inevitably reduced in price later.”
Difficulties for sellers in a buyers’ market
But there were concerns that lowering prices may cause some serious problems for some sellers – in particular those who took on a greater amount of debt when interest rates were low.
Ranald Mitchell, director of Norwich-based independent mortgage broker, Charwin Private Clients, said: “Some sellers are simply not in a position to accept reduced offers, with debt secured to the hilt on their properties.
“Many people have built a lifestyle based on ultra-low rates and they are now in a corner.”
Meanwhile, Tom Bill, head of UK residential research at estate agent, Knight Frank, said he expected UK prices to fall by 5% this year.
“[This] would still leave them 14% higher than they were before the pandemic,” he added. “Material double-digit annual declines would require a wave of forced selling, which the Rightmove data shows is not happening.
“It has been a bumpy journey as rates return to normality but demand should prove resilient given the shock-absorber effect of wage growth, lockdown savings, longer mortgage terms, lender flexibility and the popularity of fixed-rate deals in recent years.”
