Median home sales prices fell by more than £4,000 between October and November as more sellers accepted lower offers, according to property portal Rightmove.
The median price of a newly marketed home fell 1.1 percent this month, or £4,159, to £366,999, Rightmove said, while annual growth slowed to 7.2 percent from 7.8 percent. .
He said the housing market was reversing from the pandemic boom at a faster rate than expected.
All regions saw monthly price declines, with Wales, Scotland and London experiencing the biggest drops.
The real estate website stressed that the monthly decline “should not be considered in isolation as a negative indicator” as it was in line with pre-pandemic averages.
However, he admitted that the sharp rise in the cost of borrowing caused by the mini-budget hastened a slowdown in market activity that had already begun in the summer.
“The hectic market of the last two years has turned into a more normal market more abruptly and less smoothly than we expected,” said Rightmove’s Tim Bannister.
He added that sellers were becoming more aware of the need to set competitive prices to sell in today’s market, which is “much more price sensitive” after two years of “buying frenzy.”
‘Homeowners coming on the market in the later months of the year tend to price lower to attract buyers before Christmas, and we’re hearing from agents that both existing and new sellers understand that selling in today’s market requires competitive prices,’ Bannister said.
A greater number of existing sellers, whose properties were already on the market and unsold, have been willing to lower their asking prices in order to achieve a faster sale, according to Rightmove.
The share of unsold properties that saw a price reduction rose only slightly above pre-pandemic levels to 8 percent this October, though that’s double from 4 percent in October last year.
Shopper demand remains 4 percent above pre-Covid levels but has fallen 20 percent since October last year.
The now largely superseded mini-budget accelerated the slowdown in market activity that we had been seeing since the summer.
Tim Bannister of Rightmove
Rightmove said it was “clear that we have returned to a much more price-sensitive housing market after two years of a buying frenzy” as “bidding wars” broke out between buyers.
First-time buyer properties continue to be the hardest-hit sector, with year-over-year demand down 26%, while second-time demand was down 17% and the top of the ladder down 15%.
“The era of historically low interest rates and buying frenzy is over, which could usher in a more normal market opening up potential opportunities for those who have been discouraged from entering the frenzied market over the past two years,” he said. Bannister.
While he refrained from predicting how much prices might fall next year, as we wait to see what the Autumn Statement will bring, he said he was certain “the exceptional price growth of the last two years is unsustainable in the face of headwinds in against economic and increasing affordability constraints.’
The annual pace of house price growth slowed further to 7.2% this month
However, real estate agents said there was no glut of unsold properties and people looking to buy still outnumbered the number of homes for sale by a third.
This was helping to avoid price drops “more than usual for this time of year,” according to Rightmove.
All regions saw monthly price declines, with Wales, Scotland and London seeing the biggest drops of 3 per cent, 2.2 per cent and 1.9 per cent, respectively.
The east of England saw the smallest drop in average sales prices last month, just 0.1 percent, followed by the East Midlands, where prices fell 0.6 percent.
Estate agent Chestertons said: ‘Buyers rushed to complete the purchases to safeguard the fixed-rate mortgage rates they had already agreed with lenders.
“Meanwhile, many would-be sellers are waiting for more economic and political certainty before putting their properties up for sale, which will lead to a dearth of new properties coming on the market in the New Year.”
How bad will the Fall Declaration tax raid be?
With an alleged £50bn tax hole, albeit based on forecasts that are unlikely to be correct, worrying Jeremy Hunt and Rishi Sunak, the nation is softening for a wave of tax hikes in Thursday’s Autumn Declaration.
So many kites have been flown about possible tax increases that even taxing the sale of your own home and getting the 50p fee back have been raised as possible Fall Return ideas.
What taxes are likely to rise? Why does Hunt want to raise taxes when his predecessor as chancellor, Kwasi Kwarteng, was cutting them just two months earlier? Is this wise when we enter a recession?
And could this outbreak of unofficially but definitely not discouraged speculation do lasting damage to the economy?
Georgie Frost, Tanya Jefferies, and Simon Lambert discuss the tax bust of everything in this podcast.
Hit play to listen in the player above, or listen on Apple Podcasts, Audioboom, YouTube and Spotify or visit our This is Money podcasts page.
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.