As the school holidays arrive, distracted home-sellers – especially those in higher-priced homes – are potentially putting their plans on hold until the autumn moving season, according to Rightmove. Meanwhile, buyer enquiries are undimmed by the recent record interest rate rises.
And despite anecdotal evidence from around the sector to the contrary, statistics released by TwentyCi suggest that fall-throughs are not rising. In June 2019, 21% of properties with a sale agreed had fallen through, compared to 21.1% in June, a marginal increase from pre-pandemic levels. Interestingly, across the market they also suggest that there are no correlations between increased moving times and increased fall-through rates.
A 1.3% fall in the price of property coming to market is reflective of the smaller number of “urgent” sellers who are placing their homes on the market at a more competitive price in order to capture the attention of a suitable buyer quickly, and attempt to beat the average time of 136 days to complete a sale and move before Christmas.
Despite demand for houses continuing to soften, and supply constraints improving, there is still a massive imbalance between demand for new homes and housing stock. This means that, although buyer demand this month is down 4% on the frenzied market of 2021, it is still 20% higher than in 2019, according to the Rightmove July House Price Index.
This chimes with the RICS Residential Market Survey published last month which showed buyer demand was still one of the factors behind house prices to continue rising.
The number of new listings coming to market is up 12% on the same period last year, though it is 6% down on 2019, while available homes for sale are down 39% on 2019. Buyer enquiries to agents do not appear to have been particularly dented by the most recent interest rate rise, suggesting that many buyers are still committed to moving, and incorporating rate rises into their financial planning.
Rightmove’s Director of Property Science, Tim Bannister, stated:
“Sellers who want or need to move quickly at this time of year tend to price competitively in order to find a suitable buyer fast, with some hoping to complete their move in time to enjoy Christmas in a new home.
To achieve that this year, they’d need to beat the current average time between accepting an offer and completing the sale of four and a half months. Nevertheless, we’re still expecting price changes for the rest of the year to continue to follow the usual seasonal pattern, which means we’ll end year at around 7% annual growth, even with the wider economic uncertainty.
Several indicators point to activity in the market continuing to cool from the lofty heights of the last two years. It’s likely that the impact of interest rate rises will gradually filter through during the rest of the year, but right now the data shows that they are not having a significant impact on the number of people wanting to move. Demand has eased a degree and there is now more choice for buyers, but the two remain at odds and the size of this imbalance will prevent major price falls this year.”
Simon McCulloch, Chief Commercial & Growth Officer at Smoove said;
“July’s house price decrease is not yet indicative of a downward trend, and it would be wrong to read too much into the -1.1% figure. Historically, prices tend to dip in the mid to late summer. Another month-on-month fall, however, may start to indicate a direction of travel, so September’s figures will be watched closely. It also may start playing into the minds of sellers, who may start to try and expedite transactions, to stave off the risk of ‘gazundering’ – people reducing their offer to reflect house price valuation decreases.”
CEO of Octane Capital, Jonathan Samuels, commented:
“All things considered, the market remains in fine health, but the mortgage sector is currently very unsettled following a sixth consecutive base rate hike and the largest in over a quarter of a century.
There’s no hiding the fact that this will have a direct impact on the borrowing ability of the nation’s homebuyers which, in turn, will impact the price they are willing to pay for a property.
So while this may be the first drop in asking prices seen so far this year, it’s certainly not going to be the last.”
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, added:
“The summer season has pushed asking prices off the end of the pier. Optimistic sellers have been forced to face the fact that the market isn’t as hot as they’d hoped, and have been cutting asking prices for the first time in 2022. It’s not unusual for the time of year, but it’s unlikely to be the last of it.
Rightmove said that a fall of this size was common at this time of year. More people tend to put their property on the market in the summer, and if they haven’t sold by now, they take stock. A sale tends to take just over four months and they want to sell by Christmas, so they know that now is the time for a cut.
However, there are plenty of signs that this won’t be the last of the falls in asking prices. Buyer numbers are still a fifth higher than pre-pandemic levels, but they’re dropping. The RICS survey published last week also highlighted that these aren’t the same kinds of buyers as we saw during the boom. They’re more cautious, more sensitive to what’s going on in the wider world, and are more likely to pull out of sales because of rising prices, increasing rates and more job insecurity.
It also found that even when an asking price doesn’t move, buyers may have to accept lower offers to shift a property – particularly at the more expensive end of the market. It means the drop in the prices being accepted by sellers may be even bigger than the official cut in the asking price.”
