Asking prices drop at fastest rate for five years

Asking prices for houses have dropped by nearly 2% in the last month in the biggest August fall for five years, according to online property listing service Rightmove.

Rightmove said prices fell 1.9% to an average of £364,895 in August as high interest rates and inflation pressures add to the usual summer lull in the property market.

The firm said that it traditionally saw a drop in asking prices for homes listed on its service in August, but that the 1.9% fall recorded was higher than the 0.9% average annual drop seen in the month, and the steepest fall since 2018.

The fall pushed Rightmove’s price annual price index into negative territory for the first time, with the service now registering a year-on-year fall of 0.1%.

The firm said the drop in prices was occurring as the number of sales was now 15% below “normal” 2019 levels, however, prices were being supported by the fact the number of properties for sale was also down – by 10% – on 2019 levels.

Rightmove said sellers were pricing homes in order to make a sale “against the backdrop of holidays, cost of living pressures, and the highest Bank of England Base Rate since 2008”.

Prices have now fallen £8,000, or 2% from their peak in May, but remain £59,000 or 19% than the level seen pre-pandemic in August 2019.

The data comes after conflicting reports in recent weeks over the extent to which the market is holding up against the current high interest rate environment. Listed housebuilder Crest Nicholson today announced a profit warning and a restructuring in the light of a “worsened” market in recent weeks, with sales per site at just half the level forecast. Its announcement follows restructuring announcements at Bellway and Redrow in recent weeks.

Mortgage lender Halifax last week said property prices were down 2.4% annually, but that it had seen signs of “resilience” in the market, while official Land Registry figures showed that house prices actually rose in June and remain up year-on-year.

Tim Bannister, director of property science at Rightmove, said the “dramatic” 1.9% drop was “in part an expected seasonal drop as sellers coming to market realise that they have to compromise on price due to the traditionally quieter summer holiday period”.

He said: “Agents report that correctly priced homes in many areas are still attracting multiple prospective buyers competing to secure them, so if buyers see a home that could be for them and they can afford it, they may still need to act fast rather than sitting back.”

Prices fell at the fastest rate in the South west and London, Rightmove reported, with drops of 3.2% and 2.3% respectively. The North east was the only are to record price growth in the month, with average prices picking up by 0.8%