House prices fell just £82 in June despite mortgage chaos, says Rightmove

The average asking price of a home fell for the first time this year in June, according to Rightmove, but only by £82.

It comes as homeowners and buyers should continue to be plagued by increases in mortgage rates.

The small move – the first June drop since 2017 – brought the average house price in the UK to £372,812. In May, the average house price rose by 1.8 percent according to the Rightmove index.

Over the past year, home price growth slowed to 1.1 percent, and Rightmove predicts a 2 percent fall in asking prices by the end of 2023.

Price movements varied significantly in different parts of the country.

Regionally, the North East saw the biggest asking price growth in June, with average property values ​​rising 4.9 per cent to £188,414.

In London, on the other hand, prices fell by 1.6 per cent, bringing the average asking price to £685,241.

Tim Bannister, Rightmove’s director of real estate science, said: ‘Agents report that new sellers are in two camps: those who still have overly optimistic price expectations after the buoyant pandemic market, and those who have adapted to the new conditions and are coming. to the market at a competitive price.

“Sellers who price competitively find a suitable buyer much more quickly before their house looks old, and they can often negotiate the price with each subsequent purchase.”

Buyer demand is holding up

Despite significant increases in mortgage rates over the past month, buyer demand remained strong, rising 6 percent compared to the same period in 2019, Rightmove said.

After a period of steady decline since the start of the year, mortgage rates have risen rapidly over the past two weeks after the higher-than-expected inflation rate of 8.7 percent in May led the market to price in further hikes in base rates.

According to MoneyFacts, the average two-year fixed mortgage rate for a 40 percent down payment is now 5.63 percent, while that for a 10 percent down payment is 6.11 percent.

For a five-year fix, the 40 percent deposit average is 5.27 percent, and for a 10 percent deposit, it’s 5.67 percent.

There are no regular lenders that offer a two-year fixed mortgage with less than 5% interest.

House prices remained stable in June after rising in May after a slow start to the year

Last week, Natwest announced it would align its rates on two-year and five-year mortgages with deposits of 10 percent or more.

Negotiated sales have declined marginally, trailing 6 percent over the same period in 2019 over the past two weeks, compared to 3 percent behind in May.

Buyers’ and homeowners’ concerns about rate fluctuations are reflected in the activity on Rightmove’s website. Daily visits to the mortgage service have increased by 53 percent since the release of the inflation figures.

Borrowers are unlikely to relent as UK inflation data is released this week ahead of the Bank of England’s expected key interest rate hike, which would be its 13th successive hike in 18 months.

Bannister added: “We expected some more twists and turns this year and we’ve had several over the past month, including stubbornly high inflation rates, surprisingly large average wage increases and their eventual impact on mortgage interest rates and availability.

“It’s probably very hectic for those taking out mortgages now as they quickly try to lock in the best interest rate they can find.”

This is Money spoke to two experts who know the market inside out: Rob Dix, co-founder of the real estate forum, Property Hub, and Charlie Lamdin, founder of real estate website BestAgent to hear their thoughts.

Lamdin believes the impact of higher interest rates is only just beginning to show in the data. He predicts that prices will fall by 35 percent over a three-year period.

Dix is ​​more optimistic about prices, believing that we are likely to see only a small dip in the near term, due to a drop in the number of people buying and selling.