UK House Prices Fall by £4,969 as Sellers Compete This Summer

UK house prices have seen a significant drop, with the average asking price decreasing by £4,969 this month. This shift is attributed to sellers adopting more competitive pricing strategies to attract buyers during the typically quieter summer season. According to Rightmove’s latest house price index, the average asking price for new listings fell to £368,740 in August 2023, aligning with a typical ten-year trend after notable declines in June and July.

Sellers have adjusted their pricing tactics, resulting in an overall decline of more than £10,000 (-£10,777) since the beginning of the summer. Property expert Colleen Babcock from Rightmove commented, “Savvy summer sellers have read the room and are coming to market with even more competitive pricing than usual to really stand out and attract serious and active buyers.” This strategic pricing has allowed buyers to benefit from new listings that are, on average, £10,000 cheaper than three months ago.

The current market conditions have given buyers an advantage, with a higher supply of homes for sale. The number of sales agreed in July 2023 was the highest for this time of year since 2020, a period marked by the reopening of the market after the first pandemic lockdown and the introduction of generous stamp duty reductions.

Despite the positive sales figures, Babcock cautioned that many sellers are still entering the market with inflated prices, resulting in necessary reductions to remain competitive. “Our data shows that for a successful sale, it’s better to get the price right in the first place, but if a seller does need to reduce the price, it’s better to act fast rather than waiting too long,” she stated.

The number of sales agreed is now 8% higher than at this time last year, fueled by lower asking prices and a good selection for buyers. The volume of available homes has risen by 10% compared to last year, reaching a decade high. However, the number of new properties entering the market has only increased by 4% year-on-year, hinting that overall supply levels may begin to decrease.

Looking ahead, Babcock expressed optimism, stating, “We expect this good buyer activity to help support prices in the next few months.” Rightmove’s data indicates that the average time required to find a buyer is currently 62 days. Homes priced accurately from the outset tend to sell faster, averaging 32 days, while those needing price reductions take over 99 days.

The Bank of England recently announced a third interest rate cut for 2025, which is expected to enhance market confidence as the year progresses. Rightmove’s daily mortgage tracker revealed improvements in buyer affordability, with the average two-year fixed mortgage rate now at 4.49%, down from 5.17% a year prior. This translates to a savings of approximately £117 per month for those securing a two-year fixed mortgage on the average home, based on a 20% deposit over 30 years.

Matt Smith, a mortgages expert at Rightmove, noted that lenders are adjusting their rates downward to remain competitive but indicated limited room for further reductions in the near future. He stated, “We could potentially see some lenders squeeze their margin to gain a competitive advantage, but I don’t think this would play out across the market.”

In Yorkshire and The Humber, Steve Beercock, an executive director at Beercocks, reported a strong start to August, with a surge in sales recorded in just the first week. He emphasized the importance of setting the right price initially to minimize the risk of needing to make future reductions. Beercock anticipates a robust September market, driven by the recent base rate drop, which has already stimulated buyer activity.

Similarly, Amy Reynolds, head of sales at Antony Roberts in Richmond, London, noted an unexpected uptick in first-time buyer activity. “July and August have both been busier than expected in Richmond, with strong agreed sales and very few fall-throughs,” she explained. Nonetheless, she cautioned that some well-priced homes remain unsold as buyers hesitate, possibly waiting for further price drops.

As the market transitions away from the quieter summer months, the upcoming autumn season is shaping up to be dynamic and competitive, with motivated sellers and improved borrowing conditions likely influencing buyer decisions.