Rightmove reveals high supply is restricting asking price growth

The total number of homes available for sale is at its highest level for this time of year since 2014, restricting asking price growth, Rightmove says.

The latest Rightmove House Price Index shows average asking prices fell in almost five regions last month as sellers continue to battle with high mortgage rates.

Rightmove’s figures reveal that the typical price of new listings coming to market remains broadly flat, rising by 1% this month to £371,015 and down 0.1% annually.

Higher mortgage costs are putting pressure on affordability even in markets with lower property prices.”

Top of the ladder asking prices have increased by the most, up 0.8% on a monthly basis to £678.431, followed by a 0.2% rise for first-time buyer properties to £225,627. The average price for typical second-stepper properties is now £345,170, up 0.1%.

There are big regional differences.

Average asking prices dropped in northern regions on a monthly basis, the Rightmove figures show.

The largest drop was 2% in the North East to £195,977, while average asking prices fell 1.9% in Scotland to £203,415.

There was a 0.6% drop in average asking prices in the North West to £273,222 and a 0.3% decline in Wales to £267,735.

In the South West, average asking prices fell 0.6% to £376,189.

London bucked the trend though, with average asking prices up 2.5% on a monthly basis.

This helped the capital claw back some of the 6.0% fall over the summer. However, prices remain 1.7% below last year, and Rightmove said wider data indicators suggest that this month’s rise is not evidence of a broader recovery.

Buyers’ market

Across the market, the number of sales agreed is down 8% on the same period a year ago, according to the report.

Meanwhile, the number of new potential buyers contacting agents about properties is 9% lower than a year ago, and the number of new listings coming to market is 3% higher.

The portal suggests new buyers may be waiting for details of the Your First Home scheme in the Budget later this month, while it highlights that average mortgage rates for a two-year fix have increased from 5.29% to 5.55%, putting pressure on buyer budgets and adding more price sensitivity to the market.

Colleen Babcock (pictured), Rightmove’s property expert says: “The rapid rise in mortgage rates is really beginning to hit buyers’ budgets. We’re now seeing mortgage rate rises feed through to seller pricing in many of the cheaper parts of Britain, where prices had been more resilient this year.

“It’s an early sign that higher mortgage costs are putting pressure on affordability even in markets with lower property prices, affecting the areas and types of property that buyers can afford.

“This is a stark reminder of how price-sensitive the market is, and the message from agents, backed up by our data, remains the same – that competitive pricing from day one of marketing is critical to capitalise on initial buyer interest.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “It’s been clear in our offices for several months now that the double whammy of expected mortgage rate rises and shocks in the Budget is compromising confidence and activity.

“In such a sensitive market we are finding only sellers who recognise the importance of competitive asking prices are standing out from the crowd and succeeding in finding a buyer.

“Sales are gaining a little more momentum, and few are failing. However, before committing, buyers want to be sure they’re building in sufficient headroom to cover for foreseen, and unforeseen, contingencies, which is making momentum even harder to build.”

Nathan Emerson, Chief Executive of Propertymark, adds: “As we head towards the end of the year, it is fair to acknowledge some of the many challenges the housing market has faced. Although inflation has generally tracked downwards, it has yet to reach the desired 2% target that the Bank of England has long aimed for.

“This in turn has contributed to the base rate remaining higher than many would like to see and has influenced the cost and availability of mortgage deals currently on offer. For prospective buyers, this can make it more difficult to establish what is realistically affordable monthly.

“While house price growth has been changeable throughout the year, underlying demand remains, with many consumers waiting for the most opportune moment to consider making a move. Looking ahead, much will likely depend on how inflation, interest rates and mortgage affordability evolve over the coming months and into the new year.”