Asking prices drop by £7k in August

The housing market is cooling, as typical asking prices dropped by around £7,000 in August to average at £364,895, Rightmove’s house price index shows.

This represents a reduction of 1.9%, though prices are still 20% higher than they were four years ago, before the covid-19 pandemic.

Tim Bannister, director at Rightmove, said: “There are still significant challenges in saving up enough for a deposit and affording higher mortgage payments.”

It’s thought that asking prices could continue to fall in the coming months.

Tom Bill, head of UK residential research at Knight Frank, said: “We expect UK prices to fall by 5% this year, which would still leave them 14% higher than they were before the pandemic.

“Material double-digit annual declines would require a wave of forced selling, which the Rightmove data shows is not happening.

“It has been a bumpy journey as rates return to normality but demand should prove resilient given the shock-absorber effect of wage growth, lockdown savings, longer mortgage terms, lender flexibility and the popularity of fixed-rate deals in recent years.

“Furthermore, even though underlying inflation is proving stubborn and swap rates have risen slightly, there will also be downwards pressure on mortgage rates as lenders compete in a low-volume market.”

Agreed sales currently stand 15% lower than in 2019, though agreed sales to first-time buyers have only dropped by 10%.

Jeremy Leaf, North London estate agent and a former RICS residential chairman, said: “Despite a larger-than-expected drop in aspirational asking prices as opposed to selling prices, in many cases this hasn’t generated an increase in sales agreed, which remain disappointingly low.

“On the ground, we’re seeing a similar picture. Realistically-priced properties are still selling relatively quickly particularly to ‘cash’ or equity-rich buyers whereas those requiring reductions to attract more attention are sticking.

“Certainly, continuing strong employment and slightly more stable mortgage rates are helping to revive interest despite holiday distractions.”