19 September 2023 – Despite high mortgage rates the property market has started to pick up again, with 12% more new listings in the first week of September than in the same period in the previous month.
While the property market traditionally slows down over summer, this August was slower and quieter than usual. But with kids back in school and the holiday season over, there are signs that the market is starting to pick up again.
Sellers in particular seemed to have put their plans on hold in the past months, with the number of new properties being listed down by 6% in August compared to the ten-year average for that month.
And while stock levels are still 7% lower than in 2019, the first week of September has seen a bit of rush, with the number of new listings up by 12% compared to the first week of August.
36.3% Of Properties With At Least One Price Reduction
According to the latest House Price Index by Rightmove, house prices have risen by 0.4% in September compared to August. This is fairly normal for this time of the year.
However, the rise is slightly lower than the 10-year-average, which stands at 0.6%. Year-on-year house prices have fallen by 0.4%, which prompts the property portal to stick to their forecast that property prices will fall by 2% by the end of 2023.
Buyer demand has remained stable, only 1% lower than in the same period of time in 2019. But with kids being off school, the holiday season in full swing, borrowing costs at a high level and a reduction in available properties, the number of sales agreed fell by 18% in August compared to 2019.
Rightmove’s data also shows that not all sellers have adjusted to the new market yet, with 36.6% of properties having their price reduced at least once. This is above the 5-year-premandemic-average of 31.2% and at the highest rate since Janauary 2011.
The level of reduction is also at its highest level since January 2011, with the average price reduction of 6.2%. This is higher than the 5-year-premandemic-average of 5.5%.
With an average reduction of £22,709 applied to the average asking price of £366,281, there are clear signs that some sellers had too optimistic price expectations when putting their house on the market.
Even though stock levels are still 7% below 2019 levels, there are signs that more sellers are becoming active. In the first week of September, the number of new listings rose by 12% compared to the same period of time in August.
As we enter a key selling season, more people who have been thinking about what they need from a home and where they want to be living next year and beyond are taking action and coming to market. This has helped to improve buyer choice, especially for those looking for larger homes, which also means that new sellers in the middle and upper sectors need to be extra careful not to set their price expectations too high.Tim Bannister, Director of Property Science at Rightmove
Rightmove advises sellers to listen to their estate agents advice and price their home realistically. The buyers out there are serious, which can be seen in the falling number of fall-throughs.
First-Time Buyer Sector Performs Better Despite New Listings Only Up By 7%
Despite higher mortgage rates affecting first-time buyers hard, this sector is outperforming other groups since February this year.
While sales agreed overall were down by 18% in August compared to 2019, in the first-time buyer sector there were only 13% fewer sales. At the same time, buyer demand was up by 1% for this group.
With mortgage rates continuing to fall over the past seven weeks and wages increasing in real terms, affordability improves for all buyers. The average five-year fixed rate mortgage deal is now below 6%.
Even though new listings in this sector were only 7% higher than in August, house prices for properties with two or fewer bedrooms have risen by 0.7% in September compared to August.
Year-on-year, house prices for first-time buyer homes have also risen, albeit only by a marginal 0.3%. However, it’s the only sector where prices have risen on an annual basis. A first-time buyer home now costs on average £225,244, up from £223,614 in August.
But there are signs that the second-stepper and top-of-the-ladder sectors will also pick up in autumn. New listings for second-stepper homes have increased by 11% in the first week of September, compared to August.
But the biggest rise in new properties coming to the market has been seen by the top-of-the-ladder sector, with an increase of 24%.
For now, house prices for both these sectors are falling compared to the previous year, by 0.6% for second-stepper homes and 1.2% for the most expensive houses. However, this could change when the market picks up again in autumn.