17 October 2023 – October has seen a modest monthly price increase of 0.5% compared to last month. But there are more buyers in the market, with buyer activity up by 8% compared to pre-pandemic levels.
The property market follows a seasonal cycle. Over summer, buyer demand drops as children are off school and holiday season is in full swing. Traditionally, during these months the asking price drops.
As it gets colder, and the leaves start to drop, buyers return to the market and prices rise again. We have seen this pattern this year. However, the price drops in summer were higher than usual and the price increases in September and October lower than the long-term average.
Buyer demand remains strong, with 8% more buyers in the market in October compared to October 2019.
Lowest Price Increase In October Since 2008
While it’s a good sign that prices are starting to rise again after the summer slump, the rate at which they rise is far below the long-term average. On average, asking prices increased by 1.4% every October, according to Rightmove‘s latest House Price Index.
However, this year, we have only seen a modest increase of 0.5% in October. This means that sellers have adapted to a market, where affordability poses a big challenge to many buyers.
Not only is this month’s price increase far below the historic average, it is also the lowest increase for this time of the year since 2008, at the height of the financial crisis.
The modest price increase means that the average house price now stands at £368,231, which is £1,950 higher than in the previous month.
Year-on-year, house prices have fallen by 0.8%, which is a slight increase from last month, when the annual price change was -0.4%.
It is likely that falling mortgage rates are responsible for the slight uplift, as it improves affordability for many buyers. However, mortgage rates remain at an elevated level, which is why the price rises as well as the market activity are more subdued than usual for this time of year.
The average rates for both two- and five-year fixed mortgage deals are now below 6%, which is lower than their most recent high after the ill-fated mini Budget last year. This gives many buyers more confidence.
The mortgage market is much more stable right now compared to three months ago, giving movers a little more assurance over the rate they are likely to be offered and therefore what they are likely to be able to afford.
Tim Bannister, Director of Property Science at Rightmove
More Buyers In The Market But Only For The Right Price
Righmove’s data shows that there are 8% more buyer enquiries for each property for sale compared to the same period in 2019, before the pandemic brought chaos to the property market. However, while buyer demand is strong, the data also shows that buyers only buy at the right price.
But the number of sales agreed is down by 17% compared to last year. While last year 80% of all homes for sale sold subject to contract, now it’s only 60%.
According to Rightmove, a property is 60% more likely to sell if it received its first buyer enquiry on the first day it comes on the market rather than after two weeks. This means that sellers who price their property realistically from the start have a greater chance to sell than those who ask a more ambitious asking price.
While this year’s much more subdued rise indicates that some new sellers are gradually heeding their agents’ advice to price competitively, agents report that other sellers still need to adjust their expectations on the price that they are likely to achieve in the current post-pandemic, lower-activity market, where six in ten homes are now selling rather than eight in ten.
Tim Bannister, Director of Property Science at Rightmove
The property portal strongly advises sellers to listen to their agent’s advice to ensure their home is priced correctly from the start. Any price reductions at a later date can reduce the chances of the property being sold.
Our Opinion
Selling a house successfully depends on many factors, including the situation of the market. In the market of today, where affordability can be a challenge, it’s vital not to overprice your home.
As Righmove’s data shows, today’s buyers are very price-sensitive, owing to the high costs of borrowing. If a price reduction further down the line damages a seller’s chances to sell, the best course of action is to listen to a local estate agent who knows the area.
It also pays to know what affects the value of a property to ensure a seller can make their home as desirable as possible. When buyers are so conscious about value for money, a house that looks well cared for and in good repair will attract more attention.
First impressions are always important, but especially in a market like today’s. It starts with the asking price, but the Rightmove advert is just as important. And when the buyer is viewing the home, there are many things that might put them off.
So any seller serious about selling their home should ensure they prepare their home to make a big impression.
Even though there are more buyers in the market, this doesn’t mean that any house will sell. It is still important to make a property as attractive as possible and in this market this means especially when it comes to the asking price.
