The property market could bounce back if affordability pressures ease suggest Rightmove in their latest house price index.
The property portal said sales activity has show “resilience, with deals still being done for the right properties at the right price,” although acknowledged the number of sales being agreed is 8% lower than 12 months ago.
But, said Rightmove, the fact sales activity has not fallen back further, despite market volatility and rising costs could be a “positive sign for underlying demand and gives a glimmer of insight of where the market could be if affordability pressures eased.”
According to their market tracker, Rightmove said the average two-year fixed mortgage rate has risen to 5.55%, from 5.29% last month and 4.25% before the war in Iran started, adding around £250 a month to the cost of a typical new mortgage since February
Commenting on the October report, Colleen Babcock of Rightmove said: “The rapid rise in mortgage rates is really beginning to hit buyers’ budgets. We’re now seeing mortgage rate rises feed through to seller pricing in many of the cheaper parts of Great Britain, where prices had been more resilient this year. It’s an early sign that higher mortgage costs are putting pressure on affordability even in markets with lower property prices, affecting the areas and types of property that buyers can afford.”
The portal added it was seeing evidence the upcoming Autumn budget is adding “a layer of uncertainty to decision-making,” particularly amongst first time buyers awaiting the detail of the Your First Home scheme, the successor to Help to Buy.
“It’s been a difficult few weeks for home-buyers who have been watching mortgage rates rise quickly, particularly for those who had worked out what they could afford based on lower rates earlier in the year” said Rightmove’s mortgage spokesperson Matt Smith said. “Some buyers will understandably be reassessing their budget and what they can afford or feel comfortable borrowing.”
“The fact that sales activity hasn’t fallen back further so far shows that many people still want to get on with their move. Monthly budgets are going to be stretched , but the market is incredibly hard to predict particularly with so many complex global factors affecting the cost of borrowing, so home-movers must also concentrate on what’s in front of them. Whether it’s borrowing less, finding a larger deposit, or negotiating the price down on an onwards move to accept a lower offer, there could be options for home-movers to explore.
The number of new potential buyers contacting agents about properties is 9% lower than a year ago, and the number of new listings coming to market is 3% higher. The total number of homes available for sale remains at its highest level for this time of year since 2014, with the high volume of homes for sale contributing to muted new seller asking price growth.
Tracking the average price of new listings, Rightmove said it had seen a small of 1.0% this month (+£3,575) to £371,015, leaving prices virtually flat compared with a year ago. But there is now evidence of affordability pressure impacting regions which has so far proved reasonably resilient said the portal. New sellers in four of the five lowest-priced areas set lower asking prices this month; a 2% fall in the north east, 1.9% down in Scotland, 0.6% down in the North West and 0.3% in Wales. Yorkshire and the Humber is the exception, rising by 0.3%.
