UK House Prices Experience Subdued August Amid High Interest Rates and Summer Holidays
According to recent data from online real estate property portal Rightmove, UK house prices had a lackluster August due to continued high interest rates and the summer holiday season. The average new seller asking prices only increased by a marginal 0.4% during the month, reaching £366,281, which is lower than usual for this time of year.
On an annual basis, the price change dropped further to -0.4%, marking the largest fall since March 2019. Rightmove also noted that 6.3% of properties currently for sale have undergone a price reduction, and the average reduction amounts to £22,700 (6.2%) nationally.
The number of sales agreed in August across all property types also declined by 18% compared to August 2019. However, there were some hints of increased activity, with the number of new properties coming to market rising by 12% in the first week of September compared to the average weekly number in August. This boost was attributed to “back-to-school sellers.”
Additionally, there were small improvements in buyer affordability as mortgage rates continue to fall. The average five-year fixed mortgage rate dropped to 5.67%, marking the seventh consecutive week of declining rates since reaching a peak of 6.11% in July.
Tim Bannister, Rightmove’s director of property science, commented on the current market conditions, stating that all eyes will be on market activity in the coming weeks, as it will set the trend for the rest of the year. He attributed the subdued August to a combination of 14 consecutive Bank of England interest rate rises and buyers and sellers still recovering from pandemic-related disruptions. However, an autumn bounce is still anticipated.
In another report by Foxtons, it was revealed that average weekly rent has been on the rise this year. Rental prices in 2023 are 11% higher than last year, with high rental prices persisting for the third consecutive month. Analysis of Zoopla data showed that there were over 35,000 new property instructions in August, a decrease of 7% from July, but an 8% increase compared to the same period last year.
More than 10% of the new instructions in London were in Westminster, indicating a higher proportion compared to other boroughs. London also experienced the highest rental applicant budgets in recent years, with a 7% increase compared to the same period in 2022. Renter spend rose 1% month-on-month, with applicants using 100% of their rental budgets to secure a tenancy in August.
Sarah Tonkinson, managing director of Institutional PRS and Build to Rent at Foxtons, stated that August saw the largest volume of registrations this year, maintaining high prices. She also noted that London’s robust stock levels compared to 2022 indicate what the future market will look like. Tonkinson emphasized the need for landlords, developers, and agents to differentiate their listings and attract good tenants as the market heads into autumn.
In conclusion, UK house prices experienced a subdued August due to high interest rates and the summer holiday season. While there were signs of improved buyer affordability and a slight increase in new properties coming to market, the overall market activity remains lower compared to previous years. Market conditions still vary in different locations, and experts are closely watching for an autumn bounce in the housing market.
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