Asking prices ‘remain muted’ despite high demand from buyers

Asking prices for residential properties in England and Wales have remained broadly unchanged  over the past month, as price sensitive homebuyers remain cautious, due to a weakening of the economy as consumers feel the pinch of rising inflation, new figures from Rightmove show.

The data, based on property advertised between mid-June and early July, covers the period that the general election took place, creating uncertainty for investors who were already concerned about Brexit.

Rightmove said that the average asking price of a home listed for sale on its website – over 90% of UK estate agents list homes on the portal – increased by 0.1% month-on-month, taking the annual rise in prices to 2.8% compared with a 1.8% increase in June, with all regions seeing a year-on-year price rises.

Shipside said that while demand remains high, there is still a lack of supply, but stretched buyer affordability continues to act as a price brake, owed in part to higher inflation which is now exceeding price rises.

He warned that market conditions could become difficult for some homeowners, including property investors, if there is an eventual hike in mortgage costs, with the Bank of England constantly considering when to raise interest rates.

Shipside said: “Despite the number of sold boards outside people’s properties nearly equalling the number of properties that are still up for sale, especially as you go further north, sellers should note the market remains very price sensitive as some properties are hitting their price ceiling.

“Buyers, many of whom are sellers too, will struggle to afford to pay much more. Wage growth is muted, there are signs that consumer credit is tightening, and at some point there will be the first rise in mortgage interest rates for a decade or more which will come as a shock to buyers who have either forgotten or have never experienced interest rates going up as well as down.

“We can see now that price rises are muted despite high housing demand, indicating we have left the stage of the cycle where price rises exceed the rate of inflation. High demand will continue to underpin prices, but we are seeing stretched affordability limiting the pace of rises, especially in the south of the country.”