Asking prices for newly-listed properties have continued on their downward slope, Rightmove has revealed.
Sellers have been cutting prices on their homes in recent months to boost demand.
Interest from buyers in the housing market remains frosty due to high-interest rates, despite the Bank of England holding the base rate at 5.25% for the second consecutive month.
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The property website’s latest house price index - which monitors asking prices - showed prices fell by £6,000 or 1.7% between October and November - the largest drop for the month in five years - reaching £362,143.
This compares to a 0.8% monthly fall in October. Asking prices also dropped 1.3% annually, moving closer to Rightmove’s prediction of a 2% fall this year.
Tim Bannister, director of science at Rightmove, suggests the drop in asking prices suggests homeowners are becoming more realistic if they want a better chance of selling their home.
Average UK house asking prices are down
Although a drop in house asking prices is typical for this time of year, the 1.7% fall is the biggest percentage drop recorded for November in five years, the Rightmove report said.
But Rightmove puts it down to more new sellers adopting a ‘serious sellers’ strategy- to price more competitively to attract distracted buyers in the lead-up to Christmas.
“Buyers are still out there, but for many their affordability is much reduced due to higher mortgage rates,” says Bannister.
“It now looks like more sellers are understanding Rightmove’s research; that the chances of securing a buyer are much greater if they price right the first time, rather than over-pricing and reducing their price later.”
It isn’t just prices that are dropping amid the economic climate.
Transactions are also falling. The number of sales being agreed is now 10% lower than this time in 2019, according to Rightmove.
The number of sales being agreed in the smallest homes sector including studios, one and two-bed properties is just 7% lower than 2019’s level.
In larger properties including four-bedroom detached houses and all five-bedroom-plus properties, agreed sales are 14% behind 2019 levels.
Nathan Emerson, chief executive of estate agent trade body Propertymark said the market is uncertain due to elevated inflation and interest rates.
“We have the ongoing situation of consumers being extremely mindful on affordability, who need to feel greater long-term stability,” he says.
“Currently many people are still approaching the market with caution, and this will likely remain the case until there is a higher level of consistency with personal finances.”
What does this mean for house prices?
The housing market continues to recover from the pandemic with high interest rates and the cost of living crisis hitting buyer confidence.
Since then, house prices have been falling. However, Nationwide reported an unexpected monthly rise in house prices by 0.9% between September and October- the first monthly hike since April.
Whilst mortgage rates have also fallen recently, they still remain high at around the 6% mark.
“Interest rates are expected to have peaked and the worst of the house prices falls look to be behind us, but the first cut to rates still looks to be some way off,” says Lucian Cook, head of residential research at Savills said:
The expectation of a gradual reduction in rates suggests a progressive restoration of buying power and steady recovery in demand.”
Matt Nicol, managing director at Worcestershire estate agent Nicol & Co, adds that buyers have much more choice than a year or two ago, meaning if sellers price too optimistically, they are going to look towards their more competitively-priced neighbours.
“We are starting to see more pricing realism from sellers compared to a few months ago, and activity levels are positive so far in November,” he adds.
“There are certainly still buyers out there ready to take the leap if the price is right.”
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