Asking prices drop as summer lull falls on the market

The average asking price for a property in England and Wales has fallen 0.9% so far this month to £270,159, according to the latest index from Rightmove.

The property website says the decline, which is equivalent to £2,647 on a typical asking price, is seasonal, rather than related to Brexit, although buyer demand has fallen compared to this time last year when the market was buoyed by the Conservative party’s surprise general election victory.

Despite the dip in asking prices, Rightmove report that market momentum among estate agents is generally starting to improve, thanks to low mortgage borrowing rates and a severe shortage of properties on the market, which is leaving some buyers fearful of missing out on scarce choice.

“The imbalance between housing demand and supply has been well documented. While this remains a long-term problem in many parts of the country, in the run-up to and immediate aftermath of the referendum there was an understandable drop-off in buyer enquiries,” said Miles Shipside, Rightmove director and housing market analyst

But there has been a pick-up in the number of homes hitting the market since the EU vote. According to Rightmove, there has been a 6% rise in the number of new properties coming to market compared with the same period last year, which compares starkly with the 8% year-on-year drop in new housing supply in the two weeks pre-referendum.

Shipside continued: “Housing markets do not like uncertainty, with positive sentiment typically driven by confidence and momentum, supported by low borrowing costs. There seems to be little prospect of an increase in historically low mortgage rates in the short to medium term, with even greater certainty readily available with increasingly competitive five-year or even ten-year fixed rates.

“Agents in areas where stock shortages were driving momentum before the referendum say activity has recovered quickly, with buyers’ fear of losing a scarce property a key factor. They say that very few deals have fallen through as a direct result of post-Brexit jitters. Those areas of the country whose housing markets were struggling or readjusting earlier in the year, such as parts of London, will continue on what is often a fairly lengthy path of price reductions to encourage buyers to return in numbers.” 

As far as the asking price of property coming to market is concerned, the fall of 0.9% is within the range that Rightmove has recorded at this time of year since 2010.

Shipside added: “If you’re putting your property on the market and are keen to sell, then pitching your asking price too high would be counter-productive in the current environment. Buyer affordability is already stretched and they will be looking for extra reassurance that they’re getting the best priced home to suit their needs. Pricing competitively will tempt buyers, some of whom are sitting on their hands. Sellers may be extra-willing to negotiate in some less active parts of the country, so there could be opportunities for a mutually beneficial deal for buyers combined with a speedier sale for sellers.”

“The summary so far based on two weeks of post-Brexit-vote statistics is that the housing market remains steady, underpinned by the same fundamentals that have led to its recovery since the last downturn.”