Summer slowdown starts early as jittery buyers hold back

Average new seller asking prices fell by £82 this month to £372,812 – the first monthly drop this year and the first at this time of year since 2017 as turmoil sweeps across the mortgage market, latest Rightmove data reveals.

The delayed spring bounce in May has quickly turned into an earlier than usual summer price slowdown with asking prices now set to fall in most months for the rest of the year.

But despite uncertainty ahead of this week’s inflation figures and Bank of England Base Rate decision buyer demand remains strong. Indeed, over the last two weeks it is 6% higher than the same period in 2019’s more normal market.

EXPECTATIONS

Tim Bannister, Rightmove’s Director of Property Science, says: “While we sometimes re-forecast our expectations for annual price changes at this time, current trends suggest that our original forecast of a 2% annual drop in asking prices at the end of 2023 is still valid.

“Agents report that new sellers are sitting in two camps – those who still have overoptimistic price expectations following the buoyant pandemic market and those who have adapted to the new conditions and are coming to market with a competitive price.

“Sellers who price competitively are much more likely to find a suitable buyer quickly before their home appears stale.”

But significant changes in the mortgage market over the last four weeks has created disruption and uncertainty among movers, says Rightmove.

Bannister adds: “We expect that there may be more change to come depending on this week’s inflation figures and the Bank of England Base Rate decision.

“With prospective buyers who can still afford to move appearing determined to go ahead, it remains to be seen how movers will respond to the expected further rate rises.”

AGENT REACTION

Michelle Gallagher, Sales Director at JDG in Lancaster, says: “Sensibly priced properties are still selling well.

“We anticipate some more hurdles to overcome in the second half of the year but it is not all doom and gloom – we’re working with lots of people who are motivated to move and sellers who are pricing right are still seeing a lot of success.”

And Andrew Fenton, Managing Director at Chris Davies Estate Agents in Rhoose, adds: “Although there has

been some recent turbulence, I’d still class what we are seeing in the market at the moment as more normal levels of activity after the pandemic.

We’re going through a period of transition.”

“We’re going through a period of transition, and some discretionary sellers in no immediate rush to move are still testing the market with a price as there is a healthy level of buyer activity.

“We still have more buyers than homes for sale and the stand-out properties are still attracting a queue of people wanting a viewing.”

Tom Bill, Head of UK Residential Research, says: “Recent rate volatility hasn’t yet had a material impact on housing market activity because, if anything, those holding mortgage offers are keen to move sooner rather than later.

“That said, sentiment has taken a hit in recent weeks, which will keep a lid on trading volumes later this year.

“Ironically, strong wage inflation rather than the mini-Budget is now the main brake on the housing market although the outlook will only become clearer this week.

“Those buying, selling or re-mortgaging will hope the Bank of England isn’t faced with a second ugly underlying inflation reading on Wednesday.”