According to Rightmove’s latest House Price research data average new seller asking prices fell by £82 in June 2023 to £372,812. This is the first monthly drop in new asking prices this year, and the first at this time of year since 2017. On average over the previous ten years we have seen an increase of 0.6% in asking prices at this time of year, indicating that buyer affordability constraints and more pricing realism from new sellers have brought forward the usual summer slowdown.
There have been some significant increases in fixed mortgage interest rates over the last few weeks following stubbornly high inflation figures, piling pressure onto already very stretched budgets. These increases in rates and monthly mortgage payments may mean that some have to pause their plans for now. However, Rightmove’s latest snapshot of the market suggests the immediate impact on activity has been limited with most movers determined to carry on if they can still afford it.
“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. We expect asking prices to edge down during the second half of the year which is the normal seasonal pattern, and while we sometimes re-forecast our expectations for annual price changes at this time, current trends suggest that our original forecast of a 2% annual drop in asking prices at the end of 2023 is still valid. Agents report that new sellers are sitting in two camps – those who still have overoptimistic 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. 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.”
Tim Bannister Rightmove’s Director of Property Science
However, just as rates appeared to be settling, the significant changes in the mortgage market over the last four weeks are creating renewed disruption and uncertainty among movers trying to calculate how much they can afford to borrow and repay. 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%.
“We expected some more twists and turns this year and we’ve had several in the last month, including stubbornly high inflation figures, surprisingly large average wage increases, and their eventual impact on mortgage interest rates and availability. 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 frenetic for those taking out a mortgage right now, as they try to quickly lock in the best rate that they can find. 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.“
With property proces falling and rents still increasing this could signal opportunities for savvy Property Investors.
Come and find out more at our next show on 6/7 October 2023 at London ExCel