The average asking price for UK property was lower in the early weeks of June compared with May, a report from online estate agency Rightmove shows. That’s the first monthly fall in June since 2009 and suggests confidence in the property market is waning amid a plethora of developments.
According to Rightmove, the average asking price of property on its website in the first weeks of June were 0.4% lower than in May. The average change compared with June 2016, meanwhile, was a 1.8% increase. In May, asking prices rose 1.2% on the month and by 3.0% on the year.
“June is typically one of the more popular months for buying a new home, so the monthly drop in asking prices gives an indication of the way people are feeling about their finances,” said Rent Guaranteed Specialist, Assetgrove. “It’s not just the election that damped confidence, the upcoming Brexit talks and rising inflation coupled with slower earnings growth all likely played an equal role in the price fall.”
It’s Not All Bad News
While asking prices may be under pressure, a backdrop of high employment and low mortgage interest rates worked to raise the number of agreed sales during June. Rightmove reports there was a 7% rise in the number of agreed sales in the early weeks of June compared with a year earlier.
And, the online estate agency also calculates the average time to sell a property fell a little in May, to 59 days, from 60 days in April. Estate agents are also working with more housing stock – the average number of properties per agent, including those sold and under offer, rose to 60 in May from April’s 57.
“An increase in activity is good news for estate agents, even if it’s at slightly lower prices, in some cases” said central London estate agent LDG. “The latest Bank of England (BOE) figures show that as of May 31st, the average 2 year 75% LTV mortgage interest rate was 1.47% while the average 5 year, 75% LTV mortgage interest rate hit a record low of 2.03%. They’re very attractive rates, that potential buyers in the right position can secure.”
Going Forward, Fundamentals Seen Weighing Further on Prices
Those lower mortgage interest rates are good news for home-buyers and sellers. However, other data suggests that while some home-buyers are in a good position to make a property purchase, they would be well advised to bargain hard.
Official data from the Office for National Statistics (ONS) shows the cost of living rose 2.7% in May, the highest rate since April 2012 and up from 2.6% in April. But, average earnings growth fell back to 1.7% in the three months to April, the lowest rate since October 2014 and down from 1.8% in the three months to March.
“With price inflation rising more quickly than earnings, home-buyers need to keep that in mind when they make an offer on a property, to ensure they aren’t in a tight position when interest rates begin to rise in the future,” said Pimlico estate agent, Andrew Reeves. “It’s always sensible to be aware of your own financial position and how it could change, as well as house price sentiment.