Affordability for buyers is slowly improving amidst falling mortgage rates and property prices, new data from Rightmove has suggested.
The property portal said the average five-year fixed mortgage rate is now 5.81%, falling from 6.08% this time just three weeks ago, showing signs of an improving trend.
House prices are also falling with average new seller asking prices down by 1.9% (-£7,012) this month to £364,895, the biggest fall in August since 2018, as summer sellers seek to tempt buyers preoccupied by holidays, inflation, and the highest Base Rate since 2008.
These lower asking prices, combined with increasing average earnings and the apparent downward trend of mortgage rates, are “tentative steps” towards improved buyer affordability according to Rightmove, although average prices are still £59,000 (19%) higher than in the pre-pandemic market of August 2019.
What’s more, while the number of sales being agreed is 15% lower than this time in 2019 prior to the COVID-19 pandemic, the first-time buyer sector is holding up slightly better with sales agreed down by only 10%. Indeed, the number of buyers sending enquiries to agents about properties for sale in this sector remains 1% above 2019.
Rightmove also said there is “no glut of homes for sale” as the number of available properties is still 10% lower than at this time in 2019, with agents reporting that realistically priced homes in popular areas are tempting buyers who don’t want to miss out.
Indeed, their data shows that homes which are priced right from the outset take less than half as long to find a buyer than those which require a subsequent asking price reduction.
“There are still significant challenges in saving up enough for a deposit and affording higher mortgage payments, however would-be buyers are now likely to see greater property choice in their area and therefore a home more likely to suit their needs compared to during the pandemic,” said Tim Bannister, Rightmove’s Director of Property Science. He continued:
“While there is more choice there is no glut of properties for sale, with the number of available properties still lower than at this time in 2019 and homes still selling more quickly, with the average time to find a buyer now 55 days compared to 61 days in 2019.
While a 1.9% drop in just one month seems dramatic, it’s in part an expected seasonal drop as sellers coming to market realise that they have to compromise on price due to the traditionally quieter summer holiday period.
Agents report that correctly priced homes in many areas are still attracting multiple prospective buyers competing to secure them, so if buyers see a home that could be for them and they can afford it, they may still need to act fast rather than sitting back.”
