In a surprising turn of events, average new seller asking prices have dipped by £82 (-0.0%) this month, landing at £372,812. This decline marks the first monthly drop in asking prices witnessed this year, and it's the first time we've seen a decline in June since 2017. The spring bounce, which experienced a slight delay, has quickly transformed into an earlier-than-usual summer slowdown.
It's important to note that this seasonal pattern indicates that asking prices are likely to continue falling in most months throughout the year. Rightmove's forecast still points towards an overall 2% annual decrease in new seller average asking prices by the end of 2023.
Despite recent significant increases in mortgage interest rates, buyer demand has not been significantly affected according to Rightmove's statistics. In fact, buyer demand over the past two weeks has been 6% higher compared to the same period in 2019 when the market was considered more stable. However, the number of sales being agreed has experienced a slight decline, with a 6% drop in the past two weeks compared to 2019, which is slightly higher than the 3% decline observed in May.
The turbulent mortgage market is creating uncertainty among those planning to move, with further changes anticipated in the near future. Many prospective buyers are checking their affordability, leading to a 53% increase in daily visits to Rightmove's Mortgage in Principle service following the unexpectedly high inflation figures.
At the time of writing, the average rate for a 5-year fixed 85% Loan-to-Value mortgage stands at 5.20%, up from 4.56% four weeks ago. This recent rise in rates and monthly mortgage payments may prompt some individuals to temporarily pause their plans.
Despite these developments, Rightmove's latest market snapshot suggests that the immediate impact on activity has been relatively limited. Most movers are determined to proceed with their plans as long as they can still afford to do so.
Tim Bannister, Rightmove's Director of Property Science, acknowledges the slight drop in new seller asking prices as an early indicator of market trends. He points out that sellers are currently divided into two groups: those who still hold overly optimistic price expectations due to the buoyancy of the pandemic market and those who have adjusted to the new conditions by pricing competitively. Sellers who set competitive prices are more likely to attract suitable buyers quickly and avoid their property becoming stagnant, increasing the likelihood of negotiating a favorable price for their onward purchase.
Despite the recent mortgage rate increases, demand remains strong, and while the impact on sales activity has been mild, further changes may lie ahead. The mortgage market has experienced significant disruptions over the past month, with uncertainty surrounding borrowing capacity and repayment calculations. Over the past four weeks, the average mortgage rate for a 5-year fixed 85% Loan-to-Value (LTV) mortgage has risen from 4.56% to 5.20%. This translates to an additional £117 per month for a buyer purchasing a property at the current average asking price over a 25-year mortgage term.
This rapid fluctuation in the mortgage market highlights the need for prospective buyers to thoroughly assess their affordability. Daily visits to Rightmove's Mortgage in Principle service have surged by 53% since the unexpected inflation figures were released.
These recent developments indicate that the property market may continue to experience twists and turns throughout the year
