1.9% summer price drop as stretched affordability begins to improve
National average asking price Month Avg. asking price Monthly change Annual change Index August 2023 £364,895 -1.9% -0.1% 282.1 July 2023 £371,907 -0.2% +0.5% 287.5 House Price Index
• Average new seller asking prices fall by 1.9% (-£7,012) this month to £364,895, the biggest fall in August since 2018, as summer sellers tempt buyers preoccupied by holidays, inflation, and the highest Base Rate since 2008:
• These lower asking prices, combined with increasing average earnings and the apparent downward trend of mortgage rates are tentative steps towards improved buyer affordability, although average prices are still £59,000 (19%) higher than in the pre-pandemic market of August 2019
• The average five-year fixed mortgage rate is now 5.81%, falling from 6.08% this time just three weeks ago and currently showing signs of an improving trend
• Number of sales being agreed is now 15% lower than the more normal 2019, although the first-time buyer sector is holding up better and down by only 10%, due in part to record rents and the scarcity of rental property:
• In the typical first-time buyer sector of two-bedroom and fewer properties, average advertised rents are up by 12% compared to last year and by 33% compared with the same time in 2019
• No glut of homes for sale as the number of available properties is still 10% lower than at this time in 2019, with agents reporting that realistically-priced homes in popular areas are tempting buyers who don’t want to miss out:
• Rightmove data shows that homes which are priced right from the outset take less than half as long to find a buyer than those which require a subsequent asking price reduction.
The first-time buyer monthly mortgage payment is based on Bank of England data of the averages for 90% LTV two year fixed mortgages from lenders, and the average asking price of a typical first-time buyer home (two bedrooms or fewer) using the Rightmove House Price Index.
The equivalent monthly rent is calculated using the same property types (two bedrooms or fewer). The affordability to buy a first home is based on the Average Weekly Earnings (AWE) dataset from ONS multiplied by 4.5 to get the typical maximum that a person can borrow from a lender. The average asking price of a typical first-time buyer home is taken from the Rightmove House Price Index.
Price & activity trends
The average asking price of newly marketed properties drops by 1.9% this month to £364,895. This is the biggest drop in asking prices at this time of year since 2018, outpacing the average drop of 0.9% in August’s traditional summer slowdown.
The much larger than usual price drop this month indicates that some sellers are seizing the initiative and heeding their agents’ advice to price competitively for their current local market conditions, in order to attract a buyer against the backdrop of holidays, cost of living pressures, and the highest Bank of England Base Rate since 2008.
Average asking prices are now £8,000 (2%) lower than at their peak in May, but this must be placed in the larger context of significant price growth over the past four years, with average prices still £59,000 (19%) higher than in August 2019. Lower asking prices when combined with higher average earnings and the apparent downward trend in mortgage rates are tentative steps on a journey towards better buyer affordability. The average five-year fixed mortgage rate is now 5.81%, down from 6.08% this time just three weeks ago and is currently showing tentative signs of further improvement.
The number of sales being agreed is now 15% lower than at this time in 2019, as higher mortgage rates mean that some have had to pause their moving plans for now.
The typical first-time buyer sector of two-bedroom and fewer properties is down by only 10%, while the number of buyers sending enquiries to agents about properties for sale in this sector remains 1% above 2019’s pre-pandemic levels. The smallest-homes sector holding up more strongly is likely due in part to the frenzied rental market. Average asking prices in the first time buyer sector are down by 1% compared to last year, while average advertised rents for the equivalent type of home are up by a staggering 12% over the same period, and by 33% compared with the same time in 2019, indicating that for those who can, buying and getting onto the ladder remains an attractive option.
A key factor preventing more significant price falls so far this year is that the number of available properties for sale remains historically constrained and is currently 10% lower than in 2019. For sellers, Rightmove’s latest data backs up reports from agents that pricing right in the current market is key to attracting a buyer. Of homes that successfully find a buyer, properties that are priced right from the outset find a buyer on average in 27 days, less than half the 66 days that it takes on average to find a buyer if the home requires an asking price reduction after it has come to market.