Rightmove’s latest house price index reveals the largest annual price fall since December 2023, but the headline figures mask a more positive measure of market sentiment: buyer demand has increased by 5% since July.
Since Andy Burnham became prime minister on 20th July demand has increased and, while still 10% lower than the same period last year, Rightmove suggests the boost could pave the way for a busier autumn after a subdued summer.
The August average price drop of 2% (-£7,360) higher than the 10-year average of -1.3%, prompting Rightmove to downgrade its price forecast for 2026 to between 0% and -2%. But the 5% increase in demand represents an improvement on the same period last year, which saw a drop of 2%.
“The new prime minister has brought a general boost to optimism and has ruled out property tax changes in October’s budget, meaning buyers have fewer reasons to wait around and see what happens”, Rightmove explained in its report.
“While it is still early days, it gives some encouragement that after a subdued summer, where several heatwaves and the World Cup provided added distractions, the market could see a busier than usual autumn.”
Colleen Babcock, Rightmove’s property expert, added: “The mini Burnham bounce and some renewed general optimism have brought a degree of improvement to the market as a whole in recent weeks. Whether that develops into a more sustained recovery will likely depend on confidence, mortgage rates and the new chancellor’s first budget this autumn.”
On mortgage rates, Rightmove’s expert Matt Smith said: “Confidence has taken a bit of a hit as fixed rates remain elevated and return above the psychologically important 5% mark. However, the mortgage market remains highly competitive, with lenders still keen to attract business and support borrowers.”
While house prices are just one indicator of market health, this month the national average is particularly distortive when figures are looked at on a regional basis. The northern regions of England have seen an increase of 1.5% in asking prices compared to the same period last year, while southern regions have dropped by 1.8%. In London, prices are down by 3.1%.
Ongoing affordability pressures have a disproportionate impact on London, Rightmove explains in its report.
“In terms of affordability, despite wage growth out-performing property price growth in recent years, an average home in London still costs around 17 times the national average annual wage. London is also priced 38% higher than the second-highest priced region the south east.
“While high prices in London are nothing new, when combined with elevated mortgage rates, it’s a reminder of just how affordability-stretched London buyers are. Not only do Londoners also pay higher stamp duty fees overall, but last year’s reduction in thresholds, alongside the lifetime ISA price cap of £450,000, disproportionately affects first-time buyers in London.”
Ian Harris, NAEA Propertymark president, said of the figures: “Taking a wide-angle view of the property market across the year to date, it comes as little surprise that there has been a dip in overall house prices. We have seen global unrest influence household spending, the warm weather potentially impacting viewings, as well as raised concerns around longer-term affordability in areas such as energy prices.
“Although we have seen the base rate hold steady and inflation dip, it has not been enough to ignite wider consumer confidence. With reduced mortgage approvals, decreased mortgage lending and an autumn budget on the horizon, it may be a case of a slightly more subdued quarter ahead.”
