Tentative signs of improvement in affordability of property this summer

The average asking price of newly marketed properties dropped in August by 1.9 per cent to £364,895.

This is the biggest drop in asking prices at this time of year since 2018, outpacing the average drop of 0.9 per cent in August’s traditional summer slowdown.

The much larger than usual price drop this month indicates that some sellers are seizing the initiative and heeding their agents’ advice to price competitively for their current local market conditions.

Their aim has been to attract a buyer against the backdrop of holidays, cost of living pressures, and the highest Bank of England Base Rate since 2008.

Average asking prices are now £8,000 (two per cent) lower than at their peak in May, but this must be placed in the larger context of significant price growth over the past four years, with average prices still £59,000 (19 per cent) higher than in August 2019.

Lower asking prices when combined with higher average earnings and the apparent downward trend in mortgage rates are tentative steps on a journey towards better buyer affordability.

The average five-year fixed mortgage rate is now 5.81 per cent, down from 6.08 per cent this time just three weeks ago and is currently showing tentative signs of further improvement.

Tim Bannister, property portal Rightmove’s director of property science, says: “There are still significant challenges in saving up enough for a deposit and affording higher mortgage payments, however would-be buyers are now likely to see greater property choice in their area and therefore a home more likely to suit their needs compared to during the pandemic.

“But while there is more choice, there is no glut of properties for sale, with the number of available properties still lower than at this time in 2019 and homes still selling more quickly, with the average time to find a buyer now 55 days compared to 61 days in 2019.

“While a 1.9 per cent drop in just one month seems dramatic, it’s in part an expected seasonal drop as sellers coming to market realise that they have to compromise on price due to the traditionally quieter summer holiday period.

“Agents report that correctly priced homes in many areas are still attracting multiple prospective buyers competing to secure them, so if buyers see a home that could be for them and they can afford it, they may still need to act fast rather than sitting back.”