House prices fall for the first time this year, but experts warn that it is due to the summer holidays

Home prices fall for the first time this year… but experts say it’s just the holiday season and not the start of a recession

  • UK house prices fell 1.3% on average in August, the first drop this year
  • Rightmove says the drop is due to summer vacations and not the cost of living
  • Demand is down, but a lack of available homes to buy keeps prices high

House prices have fallen for the first time this year, falling 1.3 per cent in the last month and taking the average cost of a home to £365,173.

The drop follows successive interest rate hikes by the Bank of England, which has raised rates on new mortgages, but Rightmove said the drop was in line with the average August drop over the past 10 years.

The summer holidays mean that demand falls during this period and sellers are forced to set competitive prices to generate interest.

On the downside: House prices fell 1.3% in the past month, according to Rightmove

Earlier this month, the Bank of England announced a 0.5% increase in its base rate to 1.75%, the biggest increase in 27 years, further boosting rates on new fixed and variable mortgages. .

Interest rates are putting additional pressure on home price affordability, at a time when average monthly mortgage payments for new buyers making a 10 per cent deposit have topped £1,000 for the first time.

Buyer inquiries to agents were down 4 percent compared to the same period last year, Rightmove said, but are still 20 percent higher than in 2019.

New listings were up 12 percent over the same period last year, but are still 6 percent down on 2019, while available stock was down 39 percent on 2019.

August marks 20 years of the Rightmove House Price Index, with national average sales prices more than doubling in those 20 years (+134 per cent), from £155,994 to £365,173, outpacing both wages and headline inflation .

Inflection point?  This month saw the first drop in home prices this year, as the median home fell 1.3% compared to July.

Inflection point? This month saw the first drop in home prices this year, as the median home fell 1.3% compared to July.

Rising costs: The amount first-time buyers spend on their mortgage each month has hit £1000 for the first time

Rising costs: The amount first-time buyers spend on their mortgage each month has hit £1000 for the first time

Tim Bannister, Rightmove’s director of property science, said: ‘A number of indicators point to activity in the market continuing to cool from the lofty heights of the past two years.

“The impact of interest rate hikes is likely to trickle down gradually over the rest of the year, but right now the data shows that they are not having a significant impact on the number of people who want to move.

“Demand has eased off a bit and there is now more choice for buyers, but the two remain at odds and the size of this imbalance will prevent major price declines this year.”

London sees biggest price drops

Regionally, London saw the biggest drop with prices down 3.5 percent in the capital, but year-on-year prices were up 5.2 percent. House prices in Wales rose the most this month, jumping 2.1 percent to £261,117 against a year-on-year increase of 10.6 percent.

Jordan Yorath, partner at Monroe Estate Agents in Leeds, said: “So far in August we have been advising some clients in higher value real estate to market their home outside of the traditional summer holiday period.

“After an extended period where many people’s lives were restricted in terms of holidays and travel, we felt it best for clients to look to launch their properties outside of the month of August in particular, so they could reach the maximum number of buyers. committed when coming to the market.

“July was a really strong month for us, and while some might be enjoying a summer break, we’ve been busy preparing for the rest of the year, with a host of listings also due for September onwards.”

The best mortgage rates and how to find them

Mortgage rates have risen substantially as the Bank of England base rate has risen rapidly.

If you’re thinking about buying your first home, moving or remortgaging, or are a buy-to-let landlord, it’s important to get good, independent mortgage advice from a broker who can help you find the best deal.

To help our readers find the best mortgage, This is Money has partnered with independent broker L&C.

Our L&C-powered mortgage calculator can allow you to filter offers to see which ones best match your home value and deposit level.

You can also compare different fixed-rate mortgage durations, from two-year arrangements to five-year arrangements to ten-year arrangements, with monthly and total costs displayed.

Use the tool at the link below to compare the best deals, taking both fees and rates into account. You can also start an online application on your own time and save it as you go.

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