Property website Rightmove has reported a notably subdued price increase this October, the most lacklustre since the financial crisis of 2008.
Historically, October has seen an average growth of 1.4% in property prices over the last 20 years, but this year saw only a 0.5% rise, a mere £1,950 increase, settling the average at £368,231.
Year-on-year, asking prices have decreased by 0.8%. Meanwhile, property sales have declined by 17%. In a contrasting trend, enquiries from potential buyers have surged by 8% compared to October 2019, before the onset of the pandemic.
Properties with realistic starting prices have a 50% greater likelihood of sale completion once an agreement is in place.
Tim Bannister, director of property science at Rightmove, said: “New seller asking prices have seen a rise, as they usually do at this time of year following the summer holiday season.
“While this year’s much more subdued rise indicates that some new sellers are gradually heeding their agents’ advice to price competitively, agents report that other sellers still need to adjust their expectations on the price that they are likely to achieve.”
He further commented: “Buyers are likely to be on the look-out for homes that they feel represent excellent value, and to attract one of these motivated buyers, sellers need to price right first time.
“If similar nearby properties for sale appear overpriced, serious sellers have an opportunity to stand out from the crowd with a more competitive price and attract immediate buyer interest that our research shows significantly increases the likelihood of finding a buyer.”
Reaction
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“This was the most listless October bounce since the financial crisis. We usually see buyers spring back to the market after the summer holidays, keen to snap up a property before Christmas. This year there’s every sign we’ve gone from the summer holiday lull to winter hibernation, with very little bounce in the interim.
“A hefty dose of realism is the only sales approach that works in a market like this. Overpriced properties not only struggle to recapture interest after a price cut, they also encourage buyers to think that if they hang around a bit longer, prices will fall even further. The index also found that those that started out overpriced were less likely to get from a sale to a completion, because sales tend to fall through somewhere along the way.
“It’s hardly surprising people are thinking twice about over-stretching themselves. The HL Savings & Resilience Barometer found that the average mortgage payment is £765, but that couples with children pay an average of £902. Given that so many of them are on lower fixed rates, and those further down the track have much smaller monthly payments, it means those borrowing to buy today are likely to face far more alarming monthly costs, and need to think very carefully about what they can afford before taking the leap.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“It’s clear from Rightmove and other recent housing surveys that the market is transitioning but certainly not correcting.
“Although the Rightmove figures cover aspirational asking, not selling, prices, on the ground we are finding that buyers above all don’t want to overpay. No-one knows when we’re likely to reach the bottom of the market, but most seem to agree it’s likely to be sooner rather than later now mortgage rates are starting to drop.
“On the other hand, the majority of sellers are not in giveaway mode and ready to accept any offer, but have to show from their pricing and presentation that they mean business if they want to generate serious offers.
“The result is fewer viewings and protracted transactions but nearly all – especially those for cash and equity rich buyers – are getting over the line despite some tough negotiations along the way.”
Tomer Aboody, director of property lender MT Finance:
“Realistic pricing is key in current market conditions. Buyers are there to buy but the frenzy of a couple of years ago is definitely a distant memory. If a seller is really looking to sell, attractive pricing is the way to capture those motivated buyers.
“With mortgage rates slowly reducing and potentially stabilising in the next few months, a more realistic market position will be visible, as buyers will then know their exact position without stretching themselves. But for now affordability is difficult for buyers with very few being able to gain a big-enough mortgage for their purposes.”
