Home prices drop £10,000 over summer – Rightmove

Rising Supply and Falling Prices in the UK Property Market

The UK property market is experiencing a significant shift, with home prices dropping sharply over the summer months. According to a major property website, the average price of homes coming to market has fallen by more than £10,000 this season. In August alone, the average price dropped by nearly £5,000, marking a 1.3% decrease month-on-month to £368,740.

This decline aligns with the typical trend seen during this time of year over the past decade. However, it follows larger-than-expected drops in June and July, indicating a continued downward pressure on prices. The average new seller asking price for a home has now fallen by just over £10,000 (£10,777) this summer, with the average price in May standing at £379,517.

A Two-Speed Market

Rightmove highlights that the current market is characterized by a “two-speed” environment. Some sellers are pricing their properties realistically to attract buyers, while others are setting prices too high, leading to frequent price reductions. Just over a third (34%) of properties for sale are currently being reduced in price, a figure that has only been higher at this time of year in 2023 since 2012.

The overall average time to find a buyer is now 62 days, but this varies depending on whether a property requires a price reduction. Homes that do not need a price cut typically sell in 32 days, whereas those that do take an average of 99 days to sell.

Strong Sales Growth and Increased Listings

Despite the price declines, there is positive news for the market. The number of sales being agreed is 8% ahead of the same period last year, as serious buyers and sellers lock in deals. Additionally, the number of homes for sale has increased by 10% compared to this time last year.

Colleen Babcock, a property expert at Rightmove, noted that savvy summer sellers are adopting competitive pricing strategies to stand out and attract active buyers. She emphasized that buyers are benefiting from lower asking prices, which are on average £10,000 cheaper than three months ago. This dynamic gives buyers the upper hand in a high-supply market, where a tempting price is crucial to securing a sale.

Positive Outlook for the Coming Months

Babcock also pointed out that the strategy of lowering prices is working, with the number of sales agreed in July being the best at this time of year since 2020. That period saw a market rebound after the first pandemic lockdown and the introduction of stamp duty reductions.

However, she warned that the high number of price reductions indicates some sellers are still overpricing their properties before reducing them to become competitive.

Impact of Bank of England Rate Cuts

The recent base rate cut by the Bank of England is expected to provide further confidence to the market in the coming months. Babcock added that strong summer property sales and stable buyer demand suggest a positive outlook for the next few months. Traditionally, the autumn sees increased activity as the school year starts and more people focus on moving.

Autumn sellers may also be hoping to move into a new home before Christmas, but they will need to act quickly to beat the average time it takes to sell a home.

Mortgage Market Trends

Matt Smith, Rightmove’s mortgages expert, said that the market is forecasting one more base rate cut before the end of the year. Lenders have already lowered their rates to remain competitive, but further reductions may be limited if current forecasts hold. Some lenders might try to gain a competitive edge by squeezing their margins, though this is likely to target specific segments of the market rather than apply broadly.

Regional Insights

Steve Beercock, executive director at Beercocks in Yorkshire and the Humber, noted that the mid to high-end market in the region has shown particular strength, with healthy levels of activity from buy-to-let investors.

Amy Reynolds, head of sales at Antony Roberts in London, highlighted the surprising recovery in the first-time buyer flat market in her area. After a slowdown following the end of the stamp duty holiday, the market has rebounded strongly. However, some well-priced homes remain unsold, as buyers wait to see if prices drop further. Reynolds advised buyers to inquire about properties early, as the market is expected to become busier in the coming months.

Positive Signs for the Sector

Mary-Lou Press, president of the National Association of Estate Agents Propertymark, praised the sector's performance despite ongoing economic uncertainty and changes in stamp duty policies. She noted that the increase in sales and listings is a strong indicator of consumer confidence. Recent base rate cuts have also contributed to greater affordability, helping to sustain market activity.