The average price of a home fell by 1.9 per cent in August, the biggest dip for the month since 2018, following a season of surging mortgage rates which led sellers to slash the prices of their homes in order to secure a sale.
During the tail end of the summer the cost of a home fell on average by £7,012 to £364,000, according to figures by estate agent Rightmove, with the typical asking price now two per cent lower than its peak in May.
In London, house prices dipped by 2.3 per cent and the average price of a home in the capital now costs £672,000.
But slightly lower prices were still not enough to entice some buyers as the number of sales being agreed in August were 15 per cent lower than during the same period in 2019.
Rightmove said a factor in preventing more significant price falls so far this year is that the number of available properties for sale remains “historically constrained” and is currently 10 per cent lower than pre-pandemic levels.
“While a 1.9 per cent drop in just one month seems dramatic, it’s in part an expected seasonal drop as sellers coming to market realise that they have to compromise on price due to the traditionally quieter summer holiday period,” Tim Bannister, Rightmove’s director of property science, said.
In August, many high street lenders cut the price of mortgage deals as an unexpected drop in inflation helped offset the central bank’s consecutive interest rate rises – which had previously led them to ramp up costs.
The average five-year fixed mortgage rate is now 5.81 per cent, down from 6.08 per cent just three weeks ago.
“We expect UK prices to fall by five per cent this year, which would still leave them 14 per cent higher than they were before the pandemic. Material double-digit annual declines would require a wave of forced selling, which the Rightmove data shows is not happening,” Tom Bill, head of UK residential research at Knight Frank, said.
He added: “It has been a bumpy journey as rates return to normality but demand should prove resilient given the shock-absorber effect of wage growth, lockdown savings, longer mortgage terms, lender flexibility and the popularity of fixed-rate deals in recent years.”