House prices rise at slowest pace since 2008

House prices rise at slowest pace since 2008

0:05 AM, 16th October 2023, About 8 months ago

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The average asking price of a newly listed home in the UK has increased by just 0.5% (+£1,950) this month to £368,231, according to the latest data from Rightmove.

This is the smallest monthly rise for this time of year since 2008, and well below the average October increase of 1.4% over the past decade.

The slowdown in price growth reflects the lower demand from buyers, who are becoming more selective and cautious in the wake of the pandemic and the end of the stamp duty holiday.

The number of sales agreed in September was 17% lower than the same month last year, as many sellers failed to reprice their homes to meet buyer expectations.

‘New seller asking prices have seen a rise’

Rightmove’s director of property science, Tim Bannister, said: “New seller asking prices have seen a rise, as they usually do at this time of year following the summer holiday season.

“While this year’s much more subdued rise indicates that some new sellers are gradually heeding their agents’ advice to price competitively, agents report that other sellers still need to adjust their expectations on the price that they are likely to achieve in the current post-pandemic, lower-activity market, where six in 10 homes are now selling rather than eight in 10.”

He added: “In a market that agents describe as the most price-sensitive ever, buyers are likely to be on the look-out for homes that they feel represent excellent value, and to attract one of these motivated buyers, sellers need to price right first time.

“If similar nearby properties for sale appear overpriced, serious sellers have an opportunity to stand out from the crowd with a more competitive price and attract immediate buyer interest that our research shows significantly increases the likelihood of finding a buyer.”

Buyers enquiring about each available home for sale

The data shows that the number of buyers enquiring about each available home for sale is 8% higher than in 2019, which was a more normal market before the frenzy of 2020 and 2021.

Mr Bannister advised sellers to capture the attention of potential buyers with a competitive price from the first day of marketing, as this can make a big difference in securing a sale.

He cites Rightmove’s analysis that shows that if a property receives its first buyer enquiry on the first day of marketing rather than after two weeks, then it is 60% more likely to find a buyer.

Mortgage rates have been falling for 11 consecutive weeks

On the positive side for buyers, mortgage rates have been falling for 11 consecutive weeks, making borrowing more affordable.

The average two-year fixed rate is now below 6% for the first time since June, and the average five-year fixed rate has dropped from 6.08% 11 weeks ago to the current 5.43%.

Mr Bannister said: “Mortgage rates continue to trend in the right direction and have now dropped for 11 consecutive weeks, with buyer affordability gradually improving compared to this time a year ago.

“Those with a larger deposit have seen the biggest benefit from recent rate drops, with rates for those with a smaller deposit, typically those further down the housing ladder, not dropping as quickly.

“The mortgage market is much more stable right now compared to three months ago, giving movers a little more assurance over the rate they are likely to be offered and therefore what they are likely to be able to afford.”

‘London house hunters resumed their property search’

Chestertons’ head of sales, Matt Thompson, said: “An increasing number of London house hunters resumed their property search after the Bank of England announced that interest rates remain at 5.25%.

“The uplift in buyer confidence continued throughout October as we registered more buyer enquiries and higher volumes of property viewings being conducted.

“Further boosting October’s market activity is the fact that we have now entered the last few months of the year, with many buyers wanting to find a property before the festive season.”

He added: “As a result, the market is becoming more competitive again with some properties receiving multiple bids by several buyers.”

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