British housing affordability constraints as well as fading price expectations among sellers brought forward the usual summer slowdown, property website Rightmove said on Monday.
House prices dropped only GBP 82 in June, Rightmove said. This marked the first monthly decrease in asking prices this year and also the first drop in June since 2017.
Over the previous ten years, average house prices posted an increase of 0.6 percent at this time of year.
Some buyers paused their buying plans due to significant increases in fixed mortgage interest rates. However, Rightmove expects no immediate impact on activity with most movers determined to carry on if they can afford it.
House prices posted an annual growth of 1.1 percent in June after rising 1.5 percent in May.
Rightmove said asking prices are set to fall in most months over the year in line with the usual seasonal pattern. The website still forecast overall 2 percent annual decline in house prices by the end of 2023.
The drop in house prices signals that the belated spring price bounce has quickly turned into an earlier than usual summer slowdown, said Rightmove’s Director of Property Science Tim Bannister.
Bannister noted that the number of buyers enquiring was 6 percent higher than the same two weeks in the more normal market of 2019. But the number of sales agreed during this period was 6 percent lower, a slight drop from agreed sales figures being 3 percent behind 2019’s levels in May.
“Although the impact of higher mortgage rates on activity levels has been limited so far, with prospective buyers who can still afford to move appearing determined to go ahead, it remains to be seen how movers will respond to the expected further rate rises,” Bannister added.
Markets widely expect the Bank of England to lift the rate by another 25 basis points on June 22. The bank had raised its benchmark rate over the last twelve consecutive sessions to combat inflationary pressure. At 4.50 percent, the bank rate is the highest since 2008.
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