1.9% summer price drop as stretched affordability begins to improve
- Average new seller asking prices fall by 1.9% (-£7,012) this month to £364,895, the biggest fall in August since 2018, as summer sellers tempt buyers preoccupied by holidays, inflation, and the highest Base Rate since 2008:
- These lower asking prices, combined with increasing average earnings and the apparent downward trend of mortgage rates are tentative steps towards improved buyer affordability, although average prices are still £59,000 (19%) higher than in the pre-pandemic market of August 2019
- The average five-year fixed mortgage rate is now 5.81%, falling from 6.08% this time just three weeks ago and currently showing signs of an improving trend
- Number of sales being agreed is now 15% lower than the more normal 2019, although the first-time buyer sector is holding up better and down by only 10%, due in part to record rents and the scarcity of rental property:
- In the typical first-time buyer sector of two-bedroom and fewer properties, average advertised rents are up by 12% compared to last year and by 33% compared with the same time in 2019
- No glut of homes for sale as the number of available properties is still 10% lower than at this time in 2019, with agents reporting that realistically-priced homes in popular areas are tempting buyers who don’t want to miss out:
- Rightmove data shows that homes which are priced right from the outset take less than half as long to find a buyer than those which require a subsequent asking price reduction
The average asking price of newly marketed properties drops by 1.9% this month to £364,895. This is the biggest drop in asking prices at this time of year since 2018, outpacing the average drop of 0.9% in August’s traditional summer slowdown. The much larger than usual price drop this month indicates that some sellers are seizing the initiative and heeding their agents’ advice to price competitively for their current local market conditions, in order to attract a buyer against the backdrop of holidays, cost of living pressures, and the highest Bank of England Base Rate since 2008. Average asking prices are now £8,000 (2%) lower than at their peak in May, but this must be placed in the larger context of significant price growth over the past four years, with average prices still £59,000 (19%) higher than in August 2019. Lower asking prices when combined with higher average earnings and the apparent downward trend in mortgage rates are tentative steps on a journey towards better buyer affordability. The average five-year fixed mortgage rate is now 5.81%, down from 6.08% this time just three weeks ago and is currently showing tentative signs of further improvement.
Data taken from Rightmove 21.08.2023
