According to Rightmove’s July House Price Index, the national average asking price coming to £371,907. The annual change was an increase of 0.5 per cent.
This is below the zero per cent monthly norm for this time of year, which the firm attributed to new sellers tempering their price expectations due to rising mortgage costs and affordability constraints.
Rightmove said price trends were “more resilient than expected “in the first half of the year, as asking prices were 2.6 per cent higher than January.
For first-time buyers, the average asking price decreased by 0.4 per cent month-on-month to £225,552, and second steppers saw a larger month-on-month fall at negative 0.5 per cent to £340,773.
At the top of the ladder, the monthly change came to negative 0.1 per cent with the price coming to £687,944.
The report said second stepper and top of the ladder sectors reported the level of sales agreed in June as 14 per cent below 2019 levels.
“Some discretionary movers in these sectors who are trading up and are substantially increasing their mortgage are likely reassessing their budgets, waiting to see which direction mortgage rates head in the coming months,” it added.
Rightmove said base rate rises to combat inflation were having an impact, with the number of agreed sales 12 per cent below 2019 levels.
However, the report continued that buyer demand was resilient and up by three per cent on pre-pandemic 2019 figures.
The report said agents had said right-priced homes were attracting “motivated buyers” due to the shortage of property.
It added that the number of available properties for sale was 12 per cent lower than 2019 and properties that needed a 10 per cent reduction in asking price were less likely to find a buyer than right-priced properties.
Rates starting to bite
Tim Bannister Rightmove’s director of property science said interest rate rises were “beginning to bite the housing market”, pointing to fall in asking prices and number of sales agreed.
However, he reiterated that buyer demand was strong, buoyed by a shortage of homes for sale and ongoing housing needs.
Bannister added: “First-time buyers, trader-uppers and downsizers with higher deposits and lower mortgage requirements appear to be still keenly searching the market, not wanting to miss out on the right property that is not over-priced and that they can still afford.”
He continued: “The continuing twists and turns of persistent inflation and higher mortgage rates have posed some additional challenges for the market. Agents report that some movers are pausing until there is more certainty that mortgage rates have stabilised, as well as reviewing how higher costs affect their plans.
“However, there remains a large volume of motivated buyers who can factor rate rises into their budgets and are continuing to enquire about homes for sale, which is keeping the market functioning, albeit now with lower sales levels than at this time in 2019.
“Sellers who price right the first time, rather than starting with too high an asking price only to reduce later, have a much better chance of attracting one of these motivated buyers, and a good local agent will provide sellers with accurate evidence of prices that are being achieved in their area.”
