Uncertainty in the property market continues. Rightmove’s latest house price index shows sellers are cutting their asking prices at the fastest rate since 2008, with prices falling 0.8% in a year to reach £368,231.
This compares to a 0.4% annual change in September. Typically at this time of year, the housing seller market starts to pick up from a quiet summer, but according to Rightmove, “the number of sales agreed are 17% below this time last year.”
Sarah Coles, head of personal finance at Hargreaves Lansdown said: “This was the most listless October bounce since the financial crisis. We usually see buyers spring back to the market after the summer holidays, keen to snap up a property before Christmas.
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This year there’s every sign we’ve gone from the summer holiday lull to winter hibernation, with very little bounce in the interim.”
Average asking prices rise slightly
Although asking prices were down 0.8% in a year, they were up 0.5% month-on-month by £1,950.
But this sits at a 20-year historic low compared to what is considered the norm in October, which is around 1.4% says Rightmove.
The number of buyers enquiring about properties on sale is up 8% compared to pre-pandemic levels, in October 2019. But Rightmove warns sellers will be “left on the shelf” if they don’t alter their price expectations to match current levels.
“A hefty dose of realism is the only sales approach that works in a market like this,” Coles adds.
Overpriced properties not only struggle to recapture interest after a price cut, they also encourage buyers to think that if they hang around a bit longer, prices will fall even further.”
What is the outlook for house prices?
As a result of a string of base rate hikes this year, house prices have fallen as the cost of borrowing has increased.
But there has been a sliver of good news for the housing market over the last few weeks as, following the Bank of England’s decision to hold interest rates steady last month, average fixed mortgage rates have fallen consecutively for 11 weeks.
As a result, the average two-year fixed-rate mortgage is now below 6% for the first time since June according to Rightmove.
Still, experts expect further pain for house prices, with Zoopla predicting a 2% to 3% fall in 2023 overall.
Halifax, owned by the Lloyds Banking Group also predicts a fall in house prices this year. The latest Halifax House Price Index showed the average house price fell by 0.4% in September, the sixth consecutive monthly decline in 2023.
It means the typical house now costs £278,601 according to this index.
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