Optimistic home sellers have continued to raise asking prices this year, despite the interest rate crunch adding hundreds of pounds to monthly mortgage bills.
Real estate giant Rightmove said that while asking prices rose annually at their slowest pace since late 2019, they were still moving up.
The average price of newly listed homes coming onto the market rose 0.5 per cent to £371,907 in the year to July – and is up 2.6 per cent since the start of the year.
But many sellers are proving to be overly confident as there has been an increase in the number of properties seeing asking prices drop after they initially hit the market and failed to sell.
London, East and South East were the only regions where prices fell compared to last year
Buyers have been forced to adjust their expectations amid rising mortgage rates that have added hundreds of pounds to the monthly cost of buying property at the same price as last year.
The hardest hit areas are those where house prices are the highest and buyers are under the most pressure.
Rightmove said prices have proved more resilient than expected, but rising mortgage rates are now starting to weigh on the real estate market.
While prices and sales recovered much more strongly this year than most expected, the unexpectedly stubborn inflation data and the surprise of further mortgage rate hikes, when many believed they had stabilized, contributed to the fall in prices and the number of sales agreed. said Rightmove’s director, Tim Bannister.
‘The brake on interest rates, which is being used harder to slow down the economy, is now starting to gnaw at the housing market.’
Rightmove said asking prices fell slightly, by 0.2 percent, on a monthly basis, compared to June’s zero growth, slightly less than the usual stagnation for this time of year.
Rightmove’s comments echo the latest research from the Royal Institution of Chartered Surveyors, which found buyer interest, sales and property prices suffered in June from the continued rise in mortgage rates.
In June, new buyer inquiries hit an eight-month low, pointing to a “renewed deterioration” in the UK sales market, according to the Rics.
Meanwhile, Britain’s largest mortgage lender, Halifax revealed house prices fell this month at their fastest pace in 12 years, with an average fall of £7,500 over the past year.
Rightmove said prices have proved more resilient than expected, rising 2.6% since January
Rightmove’s report shows agreed sales are now 12 percent below the more normal market level of 2019, in contrast to the surprisingly strong first five months of the year.
However, buyer demand has remained resilient, rising 3 percent compared to the same period in 2019.
Rightmove said realtors report that well-priced homes are still attracting buyers because of the shortage of properties for sale compared to historical standards.
The interest rate brake, which is increasingly used to slow down the economy, is now starting to gnaw at the housing market
Tim Bannister, Rightmove
Bannister said: ‘First-time buyers, traders and downsizers with higher deposits and lower mortgage requirements still seem to be keenly searching the market as they don’t want to miss out on the right real estate that isn’t too expensive and that they can still buy. to afford.’
Larger homes have proved harder to shift, with negotiated sales for second-stepper homes and top-of-the-ladder homes down some 14 percent from last year.
In comparison, sales of smaller two-bedroom homes fared better, falling a smaller 9 percent.
“The ongoing twists and turns of sustained inflation and higher mortgage rates have created additional challenges for the market,” Bannister said.
“Agents report that some movers are pausing until there is more certainty that mortgage rates have stabilized, and are also looking at how higher costs affect their plans.”
On a regional basis, London, the East and the South East were the only regions where prices fell compared to last year, with falls between 0.4 percent and 0.6 percent.
The fastest annual growth was in Scotland, where average asking prices rose by 3.6 percent, followed by Yorkshire and the Humber with growth of 2.1 percent.
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