Rightmove: Glut of homes for sale in southern England drives asking price drop

The average asking price for a property in Britain is 0.1% lower than a year ago, according to the latest data from property listing site Rightmove.

The typical property is now being listed at £370,257, which is around £500 less than in September 2024. Although this is a small drop in the grand scheme of a house purchase, it suggests the housing market has been stagnant this year.

A glut of properties on the market in southern England is partly to blame. The number of homes for sale in the region is 9% higher than a year ago, compared to 2% elsewhere. It takes an average of five days longer to find a buyer in the south compared to the north and Wales, Rightmove said.

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Stamp duty changes in April had a disproportionate impact on London and the south east, as homes in these regions tend to be more expensive than the national average, exposing them to more tax.

Regional affordability pressures have had an impact too. The median home in the south east costs around 10 times median earnings, according to the Office for National Statistics (ONS), and around 11 times earnings in London.

This compares to eight times earnings across England as a whole, six times in the north west, and five times in the north east. The ONS defines house prices as affordable when they are around five times earnings.

Despite falling on an annual basis, asking prices in Britain did rise by 0.4% on a monthly basis in September, according to Rightmove. It is the first monthly rise recorded by the property site since May, but is still lower than the typical price rise for this time of year.

“We would expect to see a slight uptick in new seller asking prices in September, with the traditional back-to-school season boosting activity heading into autumn,” said Colleen Babcock, property expert at Rightmove.

“This year’s 0.4% September price rise is a little lower than the norm, which is an average of 0.6% at this time of year.”

Competitive pricing is “vital”

Although asking prices have come under pressure, the property market is still moving with the number of agreed sales rising by 4% compared to a year ago. Even in the south of England, agreed sales are up 3%, according to Rightmove.

Official data from HMRC (published with a longer time lag) paints a similar picture. The number of transactions in July was 4% higher than a year ago.

According to Babcock, this uptick in sales activity has been driven by “sensible and attractive seller pricing”. Rightmove describes competitive pricing as being “vital” to securing a sale, particularly in the south.

Pricing should remain important over the coming months given economic headwinds. Borrowing costs are still high, and inflation concerns could encourage the Bank of England to keep interest rates on hold for the rest of the year.

“Mortgage rates have edged upwards over the last few weeks as global events have made mortgage financing a little more expensive,” said Matt Smith, Rightmove’s mortgage expert. The average two-year fixed mortgage rate is currently 4.99%, according to financial information site Moneyfacts. The average five-year deal is 5.03%.

No immediate reaction to property tax rumours

Speculation about property taxes has dominated headlines in the lead up to the Autumn Budget, which will take place on 26 November.

The rumour is that stamp duty could be replaced with an annual property tax on homes worth more than £500,000, levied at the point of sale.

Headlines have also pointed to a possible ‘mansion tax’, with the Treasury reportedly considering charging capital gains tax on the sale of main residences that exceed a certain value, such as £1.5 million.

Property market confidence dropped in August as rumours swirled, according to the latest sentiment survey from the Royal Institution of Chartered Surveyors (RICS), with several respondents citing pre-Budget jitters as a cause.

So far, this has not translated into lower asking prices, with no major shifts in Rightmove’s real-time data. However, if tax changes do materialise, the property site said they could impact affordability-stretched areas where buyers are already struggling to take their next step up the property ladder.

“Our analysis highlights how London and south England-centric the changes would be, and these are the areas that are already performing less strongly,” Babcock said.