Asking prices are up 9.3% in the year to July to a record £369,968, according to Rightmove. Buyer demand is down 7% in a year – but it’s still 26% higher than the same time in 2019. The number of sellers is up 13% in a year, but it’s still 40% down from 2019. This imbalance is keeping prices higher. Rightmove now expects growth to be 7% at the end of the year – up from its previous forecast of 5%. The average monthly mortgage payment for first-time buyers had risen by 20% since the start of the year (rising £163 to £976 per month).
Rightmove has issued its asking prices House Price Index today:
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “Asking prices are booming again in July, as the white-hot market convinces sellers they can keep pushing prices skywards. However, that’s only half the story.
Asking prices tend to obscure more subtle moves in the market, and we’re seeing a number of small but important changes. With the number of buyers continuing to fall, and the number of sellers starting to rise, the imbalance that has pushed prices higher even as tougher times have hit could be starting to unwind, which would pour cold water on the overheated market.
During the white heat of the market, buyers have had to offer well over the asking price in order to secure the property, with many of them drawn into bidding wars. As the market slows slightly, this kind of activity is less likely. In the RICS report for June, only 50% of agents said that on average houses worth less than £500,000 were selling for more than the asking price. Meanwhile, those worth more than £1 million, were selling (on average) for less than the asking price.
At this stage in the cycle, after such a massive rise in prices, there’s a risk that sellers are pricing in another round of hikes. With runaway prices, the market soon catches up and the property sells, but the June RICS report showed that overpriced properties were going nowhere, and in some cases, people were being forced to accept an offer.
Agents also reported that more buyers are pulling out of agreed sales and trying to negotiate a lower price. Part of this is related to the fact that more mortgage lenders are down-valuing properties, and refusing to believe they’re worth what buyers are prepared to pay.
None of these things will be reflected in asking prices, which means any buyers venturing into the market need to be careful about what they’re paying for a property. Now is not the time to be making a bold offer way in excess of either what you can afford or what the rest of the market thinks the property is worth.”