Asking prices for homes fall in line with seasonal norms

The average price of property coming to market in the UK has dropped for the first time this year, according to fresh industry data released on Monday, albeit at seasonally-normal rate.

Property marketing platform Rightmove said its house price index showed asking prices falling 1.3% this month, or £4,795, to £365,173.

It said prices traditionally fall in August, with the drop “on par” with the average of 1.3% over the last 10 years.

Rightmove said the summer school holidays saw “distracted” house-movers, especially those in higher-priced homes, put their plans on hold until the autumn moving season.

Some of the more urgent sellers coming to market were pricing more competitively, it added, in order to capture the attention of suitable buyers quickly and attempt to beat the average time of 136 days to complete a sale and move before Christmas.

“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,” said Rightmove’s director of property science Tim Bannister.

“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.”

Bannister said to achieve that this year, they would 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 the year at around 7% annual growth, even with the wider economic uncertainty.”

Rightmove said the recent sixth consecutive interest rate rise from the Bank of England, by 0.5% to 1.75%, would be in the minds of many would-be movers, and when combines with the rising cost-of-living would lead to reconsiderations of what they could afford to borrow and repay each month.

It said that at the moment, the mismatch between supply and demand was still the biggest factor influencing asking prices outside of seasonal trends.

Although demand was still softening and supply constraints were improving, there was still a “massive imbalance”.

Buyer demand this month was down 4% on the “frenzied market” of 2021, but was still 20% higher than in 2019.

The number of new listings coming to market was up 12% on the same period last year, though it was 6% down on 2019, while available homes for sale were down 39% on 2019.

Buyer enquiries to agents did not appear to have been “particularly dented” by the most recent interest rate rise, suggesting that many buyers were 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 Bannister added.

“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.”

Reporting by Josh White at Sharecast.com.