Asking prices for UK homes have dropped amid a delayed response from changes to stamp duty thresholds, Rightmove suggests.
The property market is usually buoyant at this time of year as the warmer weather encourages more people to view properties, which usually pushes up house prices.
But much of the market activity was pushed to earlier this year as buyers sought to beat changes to stamp duty thresholds in April, pushing asking prices to a record highs.
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This, Rightmove suggests, has created a lull where there is now an oversupply of stock and lower demand as buyers adapt to new pricing.
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The property website’s latest House Price Index shows new seller asking prices dropped by 0.3% between May and the first weeks of June.
Annual growth slowed from 1.2% to 0.8%, putting average asking prices at £378,240.
This is an unusual dip for June, as new sellers lower their price expectations amid decade-high competition to secure buyers, Rightmove said.
It compares to an average increase in June of 0.4% over the past ten years.
Buyer demand is now 3% ahead of this time last year, while the number of homes coming to market is 11% ahead, according to the index.
With buyer choice so high, the market is very price-sensitive, so pricing realistically is key to selling.
Colleen Babcock, property expert at Rightmove, said: “It appears that we’re now seeing the decade-high level of homes for sale, and the recent stamp duty increases in England, have a delayed impact on new sellers’ pricing.
“Prices have fallen this month after the new records set in April and May.
“Agents have been telling us that sellers need to set a competitive price to have a better chance of finding a buyer in the current market, and it looks like many are listening and responding to that message. Such realistic pricing will remain key in the coming months. Underneath the headline figures, we can see regional variations in price changes this month, which appear closely linked to buyer affordability and supply levels.”
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Many analysts expected a slump in housing market activity once stamp duty thresholds changed as buyers had to adjust to higher property taxes.
The higher-priced South West, South East and London regions where stamp duty will have had more of an impact have seen the largest price drops this month, while prices have risen the most in the more affordable North West, Wales, and Yorkshire & The Humber. These regions are less affected by stamp duty increases, and in the case of Wales, not at all affected, Rightmove said.
Some buyers will have been helped by falling interest rates, which will have boosted buyer affordability, although inflation remains high.
But properties are selling if priced correctly.
Rightmove suggests that more competitive pricing is helping sales activity, with May seeing the strongest month of sales agreed since March 2022.
Rightmove’s data shows the impact of coming to market with a competitive price, a well written description, and attractive images that encourage a potential buyer to enquire about a viewing immediately.
The property website said homes that receive an enquiry on the first day of marketing are 22% more likely to successfully find a buyer than homes which take more than two weeks to receive their first enquiry.
Babcock added: “It’s an encouraging market for those looking to buy, with a very good choice of homes for sale, which also means they have good negotiating power. Some buyers with a home to sell in the current high-supply market may achieve a lower price on their own sale, but could look to offset that by negotiating a comparable discount on their purchase.
“The fact that sales are being agreed not only at a good level, but at the strongest level since March 2022, is a really positive sign that many are getting their sales tactics right. Rightmove’s analysis shows that homes which are marketed as effectively as possible and priced right at the start of marketing will get the all-important early interest that vastly increases the likelihood of finding a buyer.”
Commenting on the index, Toby Leek, president of estate agent trade body NAEA Propertymark, said this modest dip in house prices is welcome but is more than likely due as a result of the backlash in the increase in stamp duty.
He said: “A considerable number of first-time buyers will see this dip in house prices balanced out by the tax increase. Moving forward, many homebuyers will need additional support in order to enter onto the property ladder considering first time buyers need around a £60,000 deposit to buy a home."
