The number of agreed sales is 15% higher in the year to July, but average new seller asking prices have dropped by a bigger-than-expected amount this month, Rightmove reveals.
According to Rightmove, there was concern that the general election would lead to a “significant slowdown” in agreed sales and home moving activity. However, figures show most people have been going ahead with their plans.
Its latest House Price Index for July noted that last month, the number of agreed sales was 6% up on the same period the year before.
Rightmove added that the number of new sellers coming to the market is 3% up on last year, suggesting homemovers have not been deterred by the election.
Buyer demand is also stable, although first-time buyer demand dipped by around 2%. This was attributed to stretched affordability.
Average asking prices rise 0.4% YOY
Rightmove said the national average asking price came to £373,493 in July, which is 0.4% down on the prior month but up 0.4% compared to July last year.
The firm said the monthly drop was larger than the 20-year July average of -0.2%, as sellers were trying to “capture the attention of buyers with a more tempting price heading into the thick of the summer holidays and the Olympics”.
It noted: “Homemovers are dealing with more diversions than normal at this time of year, having just come through the distractions of the general election campaign and the Euro football tournament, but prices remain stable overall at 0.4% higher than a year ago.”
A crucial factor in the property market will be the Bank of England lowering the base rate, which Rightmove said could occur in August or September, offering a “boost for most homemovers” which “bodes well for the autumn market”.
Rightmove said the average five-year fixed mortgage rate is 4.97%, below the peak of 6.11% in July last year and higher than the average of 2.51% in July 2021 before the 14 consecutive base rate increases.
‘More confident outlook’ in H2 for agreed sales
Tim Bannister, Rightmove’s director of property science, said there were three major uncertainties hanging over the property market at the beginning of this year, including the base rate cut, plus the timing and result of the general election.
“We’ve now got the political certainty of a new government with a large majority, which we expect will help homemover confidence. It’s very early days, but the new Chancellor’s immediate announcements on housebuilding targets and planning reform are positive signs that the Government is keen to get going with its manifesto pledges.
“With many areas of the market that could be improved, we hope that the new Government is able to get on with its plans and deliver sustainable housing policies that help the market in the medium- to longer-term,” he said.
Bannister added that first-time buyers needed support as high mortgage rates are stretching affordability, while some were facing higher stamp duty fees when current thresholds revert in March next year.
He added: “A base rate cut is expected to lead to lower mortgage rates, which could be the gamechanger for some would-be homemovers who are being held back by significantly higher monthly mortgage costs.
“The average five-year fixed rate is still nearly twice as high as it was before the first of 14 consecutive Bank of England rate increases in 2021, with rates staying elevated for much longer than many thought that they would.
“A first base rate cut for over four years, together with the new political certainty, could set the scene for a positive autumn market, with improved affordability and a more confident outlook in the second half of the year.”
Election ‘unwelcome diversion’ for the market
Jeremy Leaf, North London estate agent and a former RICS residential chairman, said most buyers and sellers saw the election as an “unwelcome diversion which only added uncertainty and delays”, which showed in the increase in agreed sales.
He continued: “The contrast between the ‘why?’ and the ‘why not?’ approach to moving since 4 July has been quite marked in our offices.
“This survey has proved to be a reliable identifier of market health and confirms what we’ve seen too since the number of listings began to increase a few months ago – competitively-priced properties are attracting most attention.
“Of course, asking prices are not values but aspirational starting points which determine whether genuine buyers are attracted.”
Tomer Aboody, director of MT Finance, added that now the election is “done and dusted, the market can focus going forward”.
“A steady flow of transactions, despite interest rates still not coming down, is helping the market keep momentum but some help will be needed going forward. Potentially, this could take the form of stamp duty amendments, especially aimed at helping first-time buyers and families buy their next home. Will we see a Labour Government implement these, only time will tell, but an extra push would definitely be welcome.”
This article was originally published on YourMoney.com’s sister title website, Mortgage Solutions.