According to Rightmove’s latest report, this is the sixth month of consecutive records, and is up 0.4 per cent or £1,354 on last month.
Average asking prices for first-time buyers, excluding inner London, have risen by 8.5 per cent year-on-year to £224, 943 and are up 0.3 per cent on the month before.
Second-stepper’s average asking prices are up 9.8 per cent compared to the same period as last year to £338,770. This is down 0.3 per cent against June.
Prices for those at the top of the ladder have reached £678,628, which is an increase if 9.9 per cent year-on-year, and up 0.6 per cent compared to the previous month.
Demand and supply
The report said that buyer demand was still exceeding historical levels at 26 per cent higher than at the same time in 2019. However, it is seven per cent down compared to June 2021.
The number of sellers has improved up 13 per cent compared to the same period last year, however, the number of available homes for sale are 40 per cent down in relation to 2019.
Rightmove said that in light of slow stock recovery it was revising its 2022 price forecast, with seven per cent annual growth expected by the end of the year. This is up from its five per cent prediction at the start of the year.
Tim Bannister, Rightmove’s director of property science, explained: “With such an imbalance remaining between supply and demand, prices look underpinned, and we would therefore only expect typical smaller seasonal month-on-month falls, rather than more significant price falls in the second half of the year.
“This has led to us revising our annual price growth prediction for the end of the year from five per cent growth to seven per cent, although this would still mark a slowing from the 9.3 per cent seen this month.”
First-time buyer affordability and long-term fixed rates
The report said that interest rate rises and house price growth meant the average first-time buyer monthly mortgage payment for a two-year fixed rate was 20 per cent higher than at the start of the year.
The average payment is £976 per month, up £163 since the start of the year.
The report said that demand was “likely to return to more normal levels” in the second half of the year due to rising cost of living and affordability concerns.
It noted that due to further interest rate rises more people could opt for a longer-term fixed rate mortgage, especially as margins between rates tighten.
House prices easing but stock still issue
Tomer Aboody, director of property lender MT Finance, said that with such low numbers of properties coming to the market, it was “not surprising” that there were record prices as buyers competing for little stock pushed up values.
“With interest rates rising, along with inflation and house prices, first-time buyers and movers are facing even tougher conditions with markets running away from them.
“A restructure of stamp duty might encourage potential sellers to enter the market knowing that the cost of moving, whether upsizing or downsizing, is lower, and therefore more affordable,” he suggested.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said whilst asking prices were still rising it was not on a par with the pace of last year, despite stock shortages.
“Listings are on the up as sellers try to take advantage of what many appreciate is the peak of the market but still not in sufficient numbers to meet demand. Enthusiasm to move is outweighing concerns about inflation and interest rates in particular for the time being at least,” he added.
However, Leaf said that “increasingly-stretched buyers” were concerned that imminently expiring mortgage offers would lead to higher payments. This has lead to “tough discussions with bullish sellers” but there was “no significant re-negotiation or large scale withdrawals”,
Kay Westgarth, head of sales at Standard Life Home Finance, added that the report showed that UK house prices were “settling off”.
“House prices are still increasing, albeit at a slower pace than the record speed witnessed since the summer of 2020. Fear of a recession and five consecutive base rate rises are certainly putting the brakes on any further acceleration.
“The rapid growth witnessed in the last two years has, in part, driven record numbers of existing homeowners to unlock the added value from their homes through later life mortgages. The added buzz and awareness around later life lending should certainly continue to pay dividends for homeowners long after house price growth has slowed,” she noted.
