House prices dip as sellers lower prices to find buyers

The average asking price for homes entering the market has fallen by 0.3% (£1,277) this month, reaching £378,240, according to Rightmove.

This unexpected June decline, contrasting with a typical 0.4% rise for the month over the past decade, reflects sellers adapting to a highly competitive environment and recent stamp duty increases in England.

The drop follows strong price growth in April and May, suggesting a delayed reaction to April’s stamp duty hikes, which impacted higher-priced regions.

Southern areas, including the South West, South East and London, have experienced the steepest declines, driven by increased stamp duty on investment properties and second homes.

Those areas have also seen a surge in available properties.

Realistic prices

Colleen Babcock, a property expert at Rightmove said: “It appears that we’re now seeing the decade-high level of homes for sale, and the recent stamp duty increases in England, have a delayed impact on new sellers’ pricing.

“Agents have been telling us that sellers need to set a competitive price to have a better chance of finding a buyer in the current market, and it looks like many are listening and responding to that message.”

She added: “Realistic pricing will remain key in the coming months.”

The affordable regions

Rightmove’s data also highlights that more affordable regions like the North West, Wales, and Yorkshire and the Humber have seen the strongest price increases.

They have been less affected by tax changes and with smaller rises in housing supply.

Despite the price dip, the national average asking price remains 0.8% higher than last year.

Buyer activity is also holding strong, with May recording the highest number of sales agreed since March 2022, up 6% from the previous year.

This resilience is supported by rising wages outpacing house price growth and lenders easing affordability criteria.

Good choice of homes

Ms Babcock said: “It’s an encouraging market for those looking to buy, with a very good choice of homes for sale, which also means they have good negotiating power.

“Some buyers with a home to sell in the current high-supply market may achieve a lower price on their own sale but could look to offset that by negotiating a comparable discount on their purchase.

“The fact that sales are being agreed not only at a good level, but at the strongest level since March 2022, is a really positive sign that many are getting their sales tactics right.”

Likely to find a buyer

However, with new homes entering the market 11% higher than last year, outstripping a 3% rise in new buyers, the market remains price-sensitive.

Properties attracting enquiries on their first day of listing are 22% more likely to secure a buyer compared to those taking over two weeks.

With mortgage rates slightly up, averaging 4.61% for a five-year fixed term, sellers must ensure their listings stand out.

They can do this, Rightmove says, through competitive pricing, compelling descriptions and high-quality images.

Property sector reaction

Toby Leek, the president of NAEA Propertymark, said: “This modest dip is welcome but is more than likely due as a result of the backlash in the increase in Stamp Duty across England and Northern Ireland.

“A considerable number of first-time buyers will see this dip in house prices balanced out by the tax increase.

“Moving forward, many homebuyers will need additional support in order to enter onto the property ladder considering first time buyers need around a £60,000 deposit to buy a home.”

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “The amount of unsold stock is rising, and transaction numbers are falling.

“However, the overwhelming majority of agreed sales are holding, although some prices are softening.

“We are telling sellers who are also buyers, but receiving little or no interest in their properties, to concentrate on the difference between the two and reduce closer to their bottom line while still leaving room for negotiation.

“New sellers, particularly of flats, need to recognise quickly the buyers’ market conditions and price to stand out from the crowd.”

Tomer Aboody, a director of specialist lender MT Finance, said: “Sellers are more motivated to sell as buyers take advantage of lower mortgage rates.

“With the economy potentially taking a negative turn, sellers are realising that if they are serious about selling, they need to be open to offers or price correctly in the first instance.

“Increases to stamp duty have had a negative impact on the higher end of the market which has seen a slowdown.

“Buyers are eagerly waiting to see whether further rate cuts will come, which will lessen the impact of potentially higher stamp duty costs.”