What you need to know: June's Rightmove House Price Index
The UK housing market is constantly changing, and it can be hard to keep up with the latest news and statistics.
The UK housing market is constantly changing, and it can be hard to keep up with the latest news and statistics. June's Rightmove House Price Index provides a comprehensive look at property prices and the impact interest rates are having on mortgages. At Oakwood homes we wanted to share the key findings from June's Rightmove House Price Index and what they mean for the future of the UK housing market.
Sales market update
In June, the property market saw a slight dip in average new seller asking prices, with a decrease of £82 ( -0.0%) to £372,812. This marks the first monthly drop in asking prices for this year, as well as the first drop at this time of year since 2017. In previous years, there has typically been an average increase of 0.6% in asking prices during this period, indicating that buyer affordability constraints and a shift towards more realistic pricing from sellers have contributed to the summer slowdown happening earlier than usual.
One factor that may be impacting the market is the recent increase in fixed mortgage interest rates. Following persistently high inflation figures, mortgage rates have risen, putting additional pressure on already stretched budgets. As a result, some individuals may be forced to pause their property plans for the time being.
Despite these challenges, the latest snapshot of the market from Rightmove suggests that the immediate impact on activity has been limited. Many people are determined to continue with their plans if they can still afford to do so. It remains to be seen how the market will be affected in the coming months, but for now, the property market appears to be holding steady.
“Average new seller asking prices, the first and leading indicator of new trends in the market, have dropped slightly this month, signalling that the belated spring price bounce has quickly turned into an earlier than usual summer slowdown. We expect asking prices to edge down during the second half of the year, which is the normal seasonal pattern, and while we sometimes re-forecast our expectations for annual price changes at this time, current trends suggest that our original forecast of a 2% annual drop in asking prices at the end of 2023 is still valid. Agents report that new sellers are sitting in two camps – those who still have overoptimistic price expectations following the buoyant pandemic market, and those who have adapted to the new conditions and are coming to market with a competitive price. Sellers who price competitively are much more likely to find a suitable buyer quickly before their home appears stale, and they can often then negotiate on price on any onward purchase.” Tim Bannister Rightmove’s Director of Property Science
The impact of mortgages
The impact of mortgages on the housing market has been a significant factor in recent weeks, as reflected in June's Rightmove House Price Index. The statistics reveal that while there has been no effect on demand, there has been a modest impact on sales activity due to the latest mortgage rate rises.
Buyers are still showing a strong interest in properties for sale, with the number of enquiries to agents 6% higher than in 2019. However, the number of sales agreed during this period has decreased by 6%, indicating that some buyers may be hesitating due to the mortgage rate increases. It remains to be seen how the expected further increase in interest rates will affect these figures.
The mortgage market has experienced significant changes in the last four weeks, causing disruption and uncertainty among those looking to buy. The average mortgage rate for a 5-year fixed 85% Loan-To-Value ( LTV) mortgage has risen from 4.56% to 5.20%. This means that buyers would now expect to pay an additional £117 per month if repaying the mortgage over a 25-year term.
This sudden increase in mortgage rates highlights the uncertainty in the market and has led to more prospective buyers checking their affordability. Daily visits to Rightmove's Mortgage in Principle service have increased by 53% compared with before the unexpectedly high inflation figures.
Overall, the impact of mortgages on the housing market cannot be ignored. The recent rate rises have created disruption and uncertainty for buyers, making it crucial for individuals to carefully assess their borrowing capacity and repayment options before entering the market.
And locally …
Rightmove’s House Price Index gives us an understanding of what is happening nationally; for a local perspective based on your own personal circumstances, contact our team today on 03300 577654