Asking prices hit new record as buyers rush to complete
The housing market is holding up in the face of mortgage turmoil with the average asking price of a home climbing by a typical £3,398 this month, data reveals.
Sellers have priced homes at a new record average high of £371,158 in October, according to Rightmove.
Meanwhile, the number of properties for sale seeing a reduction in price increased by just 2%.
Rightmove said the vast majority of agreed sales are still going ahead. Only 3.1% of sales agreed have fallen through in the two weeks since the infamous mini Budget, which is in line with the 3% over the same two weeks during 2019.
Lack of supply continues to support the market, according to the property site.
Rate rises impacting the market
However, there are some signs that rapid mortgage rate rises alongside economic and political uncertainty are having an impact.
The monthly 0.9% price rise is a softening from the five-year average rise in October of 1.2%.
And buyer demand has tumbled by 15% over the last two weeks compared to the same period last year – but even this is still 20% higher than in 2019.
First-time buyers have been most affected with demand falling by more than 20% compared to last year.
Agents report that buyers are now rushing to complete before their lower fixed-rate mortgage offers expire.
‘New norm of higher rates’
Tim Bannister, Rightmove’s director of property science, said: “What’s going to happen to house prices is understandably on the minds of many home-movers right now, especially following the market uncertainty after the government’s mini Budget.
“There has been no immediate effect on prices, but the trend of a slight softening in the pace of growth continues.
“New sellers coming to market in the month have been pricing strongly, and the number of homes that were already on the market seeing a reduction in price is still well below the long-term average. It will take a bit of time for the market to settle in to a new, more ‘normal’ level of activity following over two years of market frenzy, especially with new developments happening almost daily at the moment.”
Tomer Aboody, director of property lender MT Finance, added: “Higher interest rates mean buyers are understandably hesitant about committing to a purchase until calmness is restored. This could take time, although some are taking advantage of the uncertainty, especially those who have a mortgage approved and need to complete.
“While a slowdown in the housing market is inevitable, everyone will have to adapt to the new norm of higher rates. The government could look to assist with a restructure of stamp duty helping facilitate transactions and getting the market moving in the right direction.”