New asking prices in the UK down almost 2% in August, Rightmove index shows

Asking prices for property in the UK were down 1.8% in August, the first drop in new sellers’ prices in but not unusual for the time of year, according to the latest index from Rightmove.

Economic recovery, low interest rates, and Help to Buy have all boosted demand but to avoid a return to excessive house price inflation, this needs to be balanced by greater supply from more sellers, increased construction of new homes and more residential conversions.

Overall the price of property coming to market is up by an average of 8.8% or £20,210 over the first eight months of the year. August also saw a new record asking price for flats and apartments and buyer demand is set to increase further when Help to Buy starts assisting purchasers of second hand property in January.

The property firm said that there is a steady recovery in the selling market but warned that as demand begins to outstrip supply, the Help to Buy scheme must be clearly marketed to potential sellers, as well as buyers, to help balance supply and demand.

Demand from home movers is already returning with the number of email leads sent from Rightmove to agents and developers up 17% year to date, the index also shows.

Property transactions are also up 5% while the supply of property coming to market lags behind increasing by a mere 0.2% so far this year with record prices for flats highlighting the issue.

‘A holiday season price dip is the norm in August, with an average drop in the last five years of over 2%. Even with this month’s below par 1.8% fall, the national average asking price is still up by more than £20,000 so far in 2013,’ said Miles Shipside, Rightmove director and housing market analyst.

‘Demand is already on the up, and that’s before the roll out of phase two of the Help to Buy stimulus. It is now critical that the supply of property improves so that the goal of a significant increase in transaction numbers is not over shadowed by an unsustainable boom in property prices,’ he explained.

‘Flats are most in demand by first time buyers and buy to let investors and we have seen prices for this property type hit their highest ever level as supply fails to keep up with an increase in demand at the bottom of the market,’ he added.

The peak holiday month of August is traditionally volatile, with asking price falls recorded every year since 2007. Fewer sellers come to market, down 8% on last month, with discretionary sellers more focused on holidays and content to wait for the busier Autumn selling season.
Sellers who do come to market during August tend to have a more pressing reason to sell and consequently price more aggressively.