If you’re looking to buy a house and are keeping an eye on the market, staying informed about the latest trends and changes is essential. One such change that has recently impacted the housing market is the rise in interest rates, affecting house prices and sales activity. In this blog post, we’ll discuss the recent drop in asking prices, the uncertainty in the mortgage market, and how buyer demand has been affected.
Recent property website Rightmove data shows average new seller asking prices to have fallen by £82 (0.0%) this month to £372,812. This marks the first monthly drop in asking prices this year and the first drop seen in June since 2017. The delayed spring bounce in May, which typically sees an increase in asking prices, has quickly turned into an earlier-than-usual summer price slowdown.
Asking prices tend to follow a seasonal pattern, with falls in most months for the rest of the year. According to Rightmove, this pattern is set to continue, with an overall 2% annual drop in new seller average asking prices predicted by the end of 2023. If you’re considering buying a property, keep a close eye on the market over the next few months to take advantage of these price drops.
Despite significant mortgage interest rate increases over the last few weeks, Rightmove’s statistics show no effect on buyer demand but a slight impact on sales activity. In fact, buyer demand over the last two weeks is 6% higher than the same period in 2019’s more normal market. However, the number of agreed sales has dropped marginally, with the last two weeks seeing a 6% decrease compared to the same period in 2019, as opposed to a 3% decrease in May.
The ever-changing mortgage market creates uncertainty among movers, with more change expected this week. Due to the unpredictability of interest rates and affordability, more prospective buyers are checking their latest affordability rates. Since the unexpectedly high inflation figures were released, this has led to a 53% increase in daily visits to Rightmove’s Mortgage in Principle service. We recommend you always speak to an independent mortgage adviser to understand the deals available across the market for your personal circumstances.
With this week’s inflation figures and Bank of England Base Rate decision looming, many are watching closely to see how these announcements will affect the housing market. At the time of writing, the average rate for a 5-year fixed 85% Loan-to-Value mortgage is 5.20%, up from 4.56% just four weeks ago. This mortgage interest rate increase may impact house prices and sales activity going forward.
Sam Webb, owner and founder of Property Webb, said, “Recent interest rate rises have contributed to a drop in average new seller asking prices for the first time this year and the mortgage market’s uncertainty has sparked concern among potential buyers. However, despite these changes, buyer demand remains strong, despite a slight impact on sales activity.”
She continued, “It’s crucial to stay informed about these changes and trends. We recommend our clients closely monitor interest rates and affordability and seek professional advice if they’re unsure how these factors affect their property purchase plans. Most importantly, however, is working with an Estate Agent who understands the market trends and is also creative and adaptable to market changes. More than ever, if you are selling your home, realistic pricing is key, and estate agents who overvalue will leave their clients in a vulnerable position.”
If you want to sell or buy in West Lothian, please feel free to contact Property Webb and find out how we can help you.