Rightmove: 'Some movers are pausing but others are rushing to complete'

Agency stock has hit the highest level so far this year but it seems to coincide with a decline in demand amid rapidly rising mortgage rates, Rightmove data suggests.

Rightmove’s latest House Price Index for October shows the average stock per agent has hit 50 properties, the highest level so far in 2022.

But just as supply seems to be improving, the portal is also reporting a slowdown in the price of property coming top market and slightly more price reductions, while demand has been dented by the economic climate and mortgage market.

The average price of property coming to the market at the start of October was up 7.8% annually and 0.9% on a monthly basis to a new record of £371,158.

The annual growth rate is slower than the 8.7% posted in September, while the 0.9% rise is a softening from the five-year average for October of 1.2%.

Rightmove said the number of homes seeing a reduction in the month has crept up by 2% to 23%, but is still lower than the pre-pandemic five-year average of 32%. 

Buyer demand has fallen 15% in the past two weeks, Rightmove said, although it remains 20% higher than the more normal market of 2019.

It warns that the first-time buyer sector appears hardest hit by interest rate increases, with demand in the last two weeks dropping by 21% compared to the same two weeks last year, though it is 24% higher than 2019.

The portal said the vast majority of agreed sales are still going ahead, with only 3.1% of sales agreed falling through in the two weeks since the mini-Budget, which is in line with the 3.0% over the same two weeks during 2019.

Agents also reported that buyers are rushing to complete before their lower fixed-rate mortgage offers expire but the property website added that some new movers have paused their plans to see how the next few weeks unfold.

Tim Bannister Rightmove’s director of property science, said: “What’s going to happen to house prices is understandably on the minds of many home-movers right now, especially following the market uncertainty after the government’s mini-Budget. 

“There has been no immediate effect on prices, but the trend of a slight softening in the pace of growth continues. New sellers coming to market in the month have been pricing strongly, and the number of homes that were already on the market seeing a reduction in price is still well below the long-term average. 

“It will take a bit of time for the market to settle in to a new, more ‘normal’ level of activity following over two years of market frenzy, especially with new developments happening almost daily at the moment.”

He said some aspiring first-time buyers will have had their plans dashed by the sudden nature of the mortgage rate rises and now face a difficult situation with rents also rising, and a shortage of available homes to rent. 

Bannister added: “Buyer demand was already starting to soften and higher interest rates were anticipated, but they’ve been brought forward sharply due to market uncertainties. 

“Agents report that many of those who managed to secure a mortgage offer at a lower rate before lenders quickly increased them are now rushing through their agreed deal to avoid their offer expiring and facing a higher rate when they come to reapply. 

“It’s understandable that some new movers who have the option to wait, may want a clearer view than they’re getting right now before they proceed with a major purchase such as a home. With uncertainty over where mortgage interest rates will go, those who can still afford to proceed may decide that waiting too long could come at an even higher cost than taking action to move now, especially if the level of demand continues to outstrip supply and supports prices.”

Tim Bannister, Rightmove’s director of property science, said: “What’s going to happen to house prices is understandably on the minds of many home-movers right now, especially following the market uncertainty after the government’s mini-Budget. 

“There has been no immediate effect on prices, but the trend of a slight softening in the pace of growth continues. New sellers coming to market in the month have been pricing strongly, and the number of homes that were already on the market seeing a reduction in price is still well below the long-term average. 

“It will take a bit of time for the market to settle in to a new, more ‘normal’ level of activity following over two years of market frenzy, especially with new developments happening almost daily at the moment.”

He said some aspiring first-time buyers will have had their plans dashed by the sudden nature of the mortgage rate rises and now face a difficult situation with rents also rising, and a shortage of available homes to rent. 

Bannister added: “Buyer demand was already starting to soften and higher interest rates were anticipated, but they’ve been brought forward sharply due to market uncertainties. 

“Agents report that many of those who managed to secure a mortgage offer at a lower rate before lenders quickly increased them are now rushing through their agreed deal to avoid their offer expiring and facing a higher rate when they come to reapply. 

“It’s understandable that some new movers who have the option to wait, may want a clearer view than they’re getting right now before they proceed with a major purchase such as a home. With uncertainty over where mortgage interest rates will go, those who can still afford to proceed may decide that waiting too long could come at an even higher cost than taking action to move now, especially if the level of demand continues to outstrip supply and supports prices.”