UK house prices have fallen for the first time this year, but experts say summer distractions rather than worsening economic conditions are to blame.
Figures released by Rightmove show that the average price of a property in the UK fell to £365,173 in August, marking a decrease of 1.3% or £4,795.
While there are concerns that rising interest rates – increased in response to rising inflation – could weigh on the housing market, Rightmove said the decline was broadly in line with summer price trends over the past decade and is likely to recover as house hunters return from holiday. , which for many was the first since the Covid restrictions were lifted.
“A drop in asking prices is to be expected this month as the market returns to normal seasonal patterns after two hectic years and many potential home movers are distracted by the summer holidays,” said Tim Bannister, a Rightmove director.
Rightmove said sellers who need to move quickly tend to lower their prices to ensure they can close deals and move in by Christmas. That’s partly because the average time to accept and complete a sale is now about four and a half months.
While a number of mortgage lenders, including Barclays, believe interest rates could creep towards 2.5% by the end of the year, resulting in higher costs for borrowers, this pressure is only expected to slow the pace of house price growth rather than reverse it.
Lloyds Banking Group, which owns Halifax and is the country’s biggest mortgage lender, said last month that while it braced for a slowdown in house price growth and mortgage lending, its own lending rate was still likely to grow by single digits over the next 12-18 months.
Rightmove said it still expects UK house prices to end the year 7% higher than in 2021, despite greater economic uncertainty and fears that rising food and fuel prices could send the UK into recession later this year.
The property website said a lack of supply will continue to drive prices up, given that the level of available stock is down 39% compared to 2019. Although buyer inquiries are down 4% compared to 2021, they are still 20% higher than before the Covid outbreak.
“It is likely that the impact of rate rises will gradually filter through the rest of the year, but right now the data shows that they are not having a significant impact on the number of people looking to move,” Bannister said.
“Demand has slowed somewhat and there is now more choice for buyers, but the two are still at odds and the size of this imbalance will prevent major price falls this year.”
He said homebuyers worried about rising interest rates should in principle secure a mortgage early to understand what they can afford, confirm the prices available and assess what they will be able to repay each month.
Rightmove has confirmed that the average monthly mortgage payment for a first-time buyer with a 10% deposit pushed past £1,000 for the first time this month.