The level of sales agreed has fallen below its normal market trend for this time of year but the “right-priced” properties are still shifting, Rightmove claims.
The portal’s latest asking price data for July shows the average price of property coming to market has dropped by 0.2% on a monthly basis to £371,907, as new sellers temper their price expectations in response to recent interest rate rises and buyer affordability constraints.
Annual asking price growth was 0.5%, its lowest level since November 2019.
Average asking prices are still 2.6% higher than in January, Rightmove said, but the number of sales agreed in June is 12% behind 2019’s more normal market level.
The portal suggested this means the Bank of England’s rate hikes and higher mortgage pricing is biting, although buyer demand remains 3% higher than at this time in 2019.
The two larger home sectors have been most impacted by lower levels of agreed sales, Rightmove said.
The numbers of sales agreed in June in the mid-market second-stepper sector and the top-of-the-ladder sector are 14% behind 2019’s level.
Meanwhile, the smaller home, two-bedrooms and fewer market sector has been less impacted, with June’s sales agreed figure 9% below 2019’s level.
Agents reported that "right-priced” homes are still attracting motivated buyers due to the shortage of property for sale compared with historic norms.
The number of available properties for sale is 12% lower than in 2019, according to Rightmove’s index.
Average agency stock for June rose to 52 properties compared with 49 in May and 47 this time last year, while time on the market is now 55 days, compared with 32 in June 2022.11
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.
“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.”
Highlighting the importance of realistic pricing, Rightmove said properties that need a reduction in asking price are more than 10% less likely to find a buyer than those that were priced right from the start. With the chances of selling already lower due to current market conditions, initial over-pricing reduces those chances markedly further, the portal said.
Bannister added: “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.”
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The critical factor here is establishing 'the right price' for a property, given the current level of pessimism in the market. Expectations of further price falls tomorrow will lead buyers to try to ensure they do not overpay today. This completely rational pursuit of self-interest will take some time to play out against the background of still rising interest rates, so reinforcing the reality of this current downward phase of the housing market cycle.
If the Conservatives do not find some national confidence by the end of the Q1 2024 they are toast.
I expect Rishi will say we are in this mire together and do nothing and Labour will have a landslide victory. As a weak Conservative supporter after all the damage they have done, like others, my head could be turned easily.
The collapse of the property market didn't need to happen and firmly lies at the political door imo.
It must have escaped your notice Glenn, the Tories have been attacking the property market since 2010, starting with George Osbourne and the hideous Stamp Duty rates, followed by the attack on the private rented sector, culminating in support for destructive and pointless interest rates hikes supposedly to deal with inflation, which of course they created themselves by the completely stupid and utterly ineffective response to Covid. It really could not get any worse, a trained monkey would do a better job
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