Market driven by need to move rather than desire, say experts
The property market continues to be driven by those who need to move rather than those who want to, the latest Lloyds house price index shows.
August saw the second monthly house price fall in a row, down by -0.2% compared to a -0.1% decrease in July. The average property price is now £298,468 and is down -0.4% annually, the first year-on-year decrease since November 2023. However, prices are still marginally up (+0.2%) since the start of the year.
Regionally, Northern Ireland continued to record the UK’s strongest annual growth at 6.9% while Scotland saw prices rise +3.5% and Wales +0.6%. In England, the North East recorded annual growth of +2.7% while the North West saw prices rise +2.0%. In the South East, prices were down -1.6% year-on-year, followed by Greater London, down -1.5% and the South West and Eastern England both down -1.2%.
Sentiment is cautious
Jonathan Hopper, CEO of Garrington Property Finders, said that despite the regional differences, sentiment is cautious everywhere. “Deals are mostly being done by ‘need to move’ buyers rather than ‘want to move’ buyers. The more affordable price bands are the most active, as generally speaking motivation levels are higher here,” he said.
“The latest weak data is likely to further suppress buyer activity as the prospect of further price falls won’t encourage buyers to rush to do a deal at anything other than a fair price this Autumn,” he said.
Jason Tebb, president of OnTheMarket, agreed: “Buyers and sellers are taking a pragmatic approach and adjusting expectations. The resilience of the market, and determination of needs-based buyers and sellers who are proceeding with their transactions, remains evident.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said he was witnessing similar patterns. “We are seeing a bit of a stand-off between buyers who are nervous about making offers while worried about the effects of inflation on mortgage costs, and sellers who believe they have reduced as much as they can.
“Therefore, prices overall in the fewer properties which are changing hands are not only softening but sales are taking longer.”
Andrew Asaam, mortgages director at Lloyds, said it was important to keep recent price movements in perspective, however. “Average house prices remain around 25% higher than they were at the end of 2019, despite the substantial increase to interest rates seen over recent years. The market’s adjustment to higher borrowing costs has been gradual, with wage growth helping to offset some of the pressure on affordability. The recent modest declines in prices are best viewed in that wider context.
“We expect the market to remain fairly subdued in the months ahead, but this will likely only have a limited impact on house prices. While affordability remains a challenge, wages continue to grow and employment has held up better than many anticipated. This will help to support demand.”
