This month saw another increase of average prices for new properties coming to the market. Prices have rose by 0.9%, or £3,398 which means that the average asking price for new properties has reached a new record high of £371,158 according to the latest figures.
With there being a shortage of homes on the market, it’s no surprise that competition is still underpin prices.
It appears there is little pressure to decrease prices on existing properties for sale, with the number of reductions sitting at 23%, which is still lower than the pre-pandemic five-year average of 32%.
Asking prices are expected to drop in November and December however the reason behind this is seasonal price changes which is not to be confused with market changes cause by other factors.
Tim Bannister, director of data services, commented: “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.”
Many potential home-movers are choosing their put a pause on their home buying plans as a result of the recent hike in mortgage interest rates as they want to see what the next few weeks/months hold.
Demand within the industry has decreased by 15% in the last two weeks compared with the same two weeks in 2021. However, demand is still higher than the normal market of 2019.
Looking at the demand changes in different market sectors, it’s clear that first-time buyers have been affected the most by the higher rates.
First-time buyer demand has decreased in 21% in the last two weeks compared to the same two weeks in 2021.
In terms of regions, Scotland was the only region that saw a slight increase in demand compared to last month according to data company, TwentyCi.
The biggest decline in demand was recorded in the East Midland where demand dropped by 5.67% since the previous month, and outer London found that demand decreased by 5.53% since September.
Bannister commented on the drop in demand within the property market: “The vast majority of buyers who had already agreed their purchase are still going ahead. Some aspiring first-time buyers will have had their plans dashed by the sudden nature of the mortgage rate rises, and now face a difficult situation with rents also rising, and a shortage of available homes to rent.
“Buyer demand was already starting to soften and higher interest rates were anticipated, but they’ve been brought forward sharply due to market uncertainties. Agents report that many of those who managed to secure a mortgage offer at a lower rate before lenders quickly increased them are now rushing through their agreed deal to avoid their offer expiring and facing a higher rate when they come to reapply.
“It’s understandable that some new movers who have the option to wait, may want a clearer view than they’re getting right now before they proceed with a major purchase such as a home.
“With uncertainty over where mortgage interest rates will go, those who can still afford to proceed may decide that waiting too long could come at an even higher cost than taking action to move now, especially if the level of demand continues to outstrip supply and supports prices.”
Although there is a shortage of homes on the market, agents are getting more listings. Figures from the latest Homemover Pulse property market summary shows that there are approximately 263,359 properties listed for sale in the UK which is an increase of 8.75% in September.