House prices in the UK have fallen for the first time this year, according to Rightmove's latest house price index. The average price of a property coming onto the market is now £365,173, which has dropped by 1.3 per cent in August.
So far this year, there have been six consecutive house price rises which brought the average house price to a record high of £369,968 in July. This was brought on by a continued desire to move and low number of homes for sale, with buyer demand 26 per cent higher than at the same time in 2019.
Buyer demand in August is now down 4 per cent in comparison to 2021. But Rightmove say that house prices falling is expected at this time of year, with the 1.3 per cent drop on par with the average over the last ten years.
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During the summer holidays house hunters with children tend to put their plans to move on hold until the autumn.
Some of the more urgent sellers are pricing their properties more competitively at the moment to capture the attention of a suitable buyer quickly and help complete a sale in time for Christmas.
Tim Bannister, Rightmove’s director of property science says: "A drop in asking prices is to be expected this month, as the market returns towards normal seasonal patterns after a frenzied two years, and many would-be home movers become distracted by the summer holidays.
"Indeed, for those that can, this may be their first summer holiday abroad since before the pandemic. Sellers who want or need to move quickly at this time of year tend to price competitively in order to find a suitable buyer fast, with some hoping to complete their move in time to enjoy Christmas in a new home.
Tim added: "To achieve that this year, they’d need to beat the current average time between accepting an offer and completing the sale of four and a half months. Nevertheless, we’re still expecting price changes for the rest of the year to continue to follow the usual seasonal pattern, which means we’ll end year at around 7% annual growth, even with the wider economic uncertainty.”
The sixth consecutive interest rate rise, which has this time jumped up by 0.5% to 1.75%, will no doubt be in the minds of many house hunters.
Together with the rising cost of living, people are now being forced to reconsider what they can afford to borrow and repay each month.
The mismatch between supply and demand is still the biggest factor influencing house prices outside of seasonal trends. Although demand continues to soften, and supply constraints are improving, there is still a massive imbalance.
Buyer demand in August is down 4% on the frenzied market of 2021, but is still 20% higher than in 2019. The number of new listings coming to market is up 12% on the same period last year, though it is 6% down on 2019, while available homes for sale are down 39% on 2019.
Buyer enquiries to agents do not appear to have been particularly dented by the most recent interest rate rise, suggesting that many buyers are still committed to moving, and incorporating rate rises into their financial planning.
“Several indicators point to activity in the market continuing to cool from the lofty heights of the last two years," Tim continued.
"It’s likely that the impact of interest rate rises will gradually filter through during the rest of the year, but right now the data shows that they are not having a significant impact on the number of people wanting to move.
"Demand has eased a degree and there is now more choice for buyers, but the two remain at odds and the size of this imbalance will prevent major price falls this year.
"For those looking to move who are concerned about interest rate rises, it’s important that they get a mortgage in principle early on in their moving journey to understand what they could afford to borrow, and find out about the rates available to them to assess what they are able to repay each month.”
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