Market shock as asking prices fall by more than usual before Christmas

Asking prices of homes coming to the market have fallen for the second month in a row - and Rightmove says it’s more than just the usual seasonal slowdown.

They have dropped 1.5 per cent in the past month: that’s an average of £4,496 for each home coming to the market in the past four weeks.

Combined with November’s drop that means the average asking price is now 3.2 per cent lower than two months ago - that’s a hefty £9,719 for the typical UK home. 

This is the biggest fall over two consecutive months since 2012, when asking prices dropped by £11,836 over the same period. 

The Rightmove portal - gearing up for peak visits over the Christmas period - insists there are some signs that these cheaper prices are tempting buyers back into the market, with the number of sales agreed proving surprisingly resilient. 

Miles Shipside, portal director and housing market analyst, comments: “It’s usual for new-to-the-market sellers to price lower in the run-up to Christmas to tempt distracted buyers, so we should not read too much into the mere fact of two consecutive monthly falls. 

“However, these falls have been larger than usual, making this the largest fall over two months for six years, showing that there are more than just seasonal forces at play. 

“With stretched affordability limiting some people's ability to buy for the first time or trade up, a modest lowering of property prices combined with an increase in wage growth could help more of them to move and thus increase transaction numbers.”

As well as the usual Christmas slowdown, would-be sellers are also faced with downwards price pressure from stretched buyer affordability and Brexit uncertainty. 

The three regions where property prices went up most since 2012 are now seeing year-on-year price falls. 

London has dropped 1.1 per cent, the South East is down 0.9 per cent and the East of England has dipped 0.7 per cent.

Rightmove says the drag of London and its commuter-belt regions keeps the national average annual rate of increase at 0.7 per cent as the year comes to an end, despite some significant increases in northern regions.

“Rightmove’s forecast for 2018 was that prices would rise by a subdued one per cent as lacklustre wage growth and tighter lending criteria could no longer support rising prices in some regions” says Shipside.

“However, the northern regions are keeping the national figure in positive territory as 2018 draws to a close. Wales leads the UK’s annual growth with 6.2 per cent while the East Midlands, West Midlands and Yorkshire & the Humber are all between four and five per cent. 

“We forecast that 2019 will see a similar pattern with the north still broadly out-performing the south, though our prediction for the year ahead is slightly more muted with the overall national average flat at zero per cent.”

"Rightmove’s forecast for 2018 was that prices would rise by a subdued one per cent as lacklustre wage growth and tighter lending criteria could no longer support rising prices in some regions” says Shipside.

“However, the northern regions are keeping the national figure in positive territory as 2018 draws to a close. Wales leads the UK’s annual growth with 6.2 per cent while the East Midlands, West Midlands and Yorkshire & the Humber are all between four and five per cent. 

“We forecast that 2019 will see a similar pattern with the north still broadly out-performing the south, though our prediction for the year ahead is slightly more muted with the overall national average flat at zero per cent.”