Rightmove warns summer slowdown has come early

Asking prices have fallen on a monthly basis at this time of year for the first time since June 2017 as evidence emerges of the impact of higher mortgage rates on the property market.

Rightmove’s latest asking price data shows average new seller prices were down £82 in June to £372,812 but remained up 1.1% annually.

The portal said prices have typically risen by 0.6% at this time of year, which it said indicates that buyer affordability constraints and more pricing realism from new sellers have brought forward the usual summer slowdown.

Despite this, Rightmove is maintaining its house price expectations for this year.

It comes as mortgage lenders have been quickly removing and repricing deals amid an expected interest rate rise this week.

The disorderly mortgage market is creating uncertainty among movers with more change expected this week, Rightmove said.

It said more prospective buyers are checking their latest affordability, with daily visits to Rightmove’s Mortgage in Principle service jumping by 53% since the unexpectedly high inflation figures at the end of May.

Meanwhile, the number of buyers enquiring to agents about properties for sale is still 6% higher than the same two weeks in the more normal market of 2019, while the number of sales agreed during this period is 6% lower, according to Rightmove.

The data shows that average agency stop is up from 46 properties per agent last year to 49 in May, while the average time to secure a buyer remained flat during the month at 55, which is longer than the 32 days recorded in May 2023.

Tim Bannister, Rightmove’s director of property science, said: “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.”
 

Meanwhile, OnTheMarket’s latest sentiment index suggests buyer and seller confidence has not yet been rocked by the mortgage market uncertainty, with both sides of the transaction still positive about being able to move in the next three months.

That is despite its own data showing properties are taking longer to sell.

Its data shows the proportion of properties that have reached sales agreed with 30 days has dropped from 61% last year to 42% in May 2023, while the numbers reaching this point after 60 days has increased from 17% to 20%.

Meanwhile, the proportion of homes still on the market after 150 days has increased from 8% to 17% over the 12-month period.

Jason Tebb, chief executive of OnTheMarket, said: “We wait to see how recent volatility pans out but what it does provide is a sense check. There are people who need or want to move, but buyers also believe prices are inflated. With offers regularly being made below asking price, pricing correctly in the first instance is crucial. 

“Sellers and their agents should be having conversations, not just about pricing but about timing. If you want to move by a certain date, ask your agent about various pricing structures and how being sensitive on price can speed up the time it takes to find a buyer. When the market is in flux, pricing competitively means pricing ultra-realistically. 

“The fallout from the latest inflation figures may be felt more keenly in June’s data, with the impact of higher mortgage rates and potential for further base rate rises unsettling buyers and sellers alike.

“It looks as though the next three months might well be tougher than originally thought and there may be a negative knock-on impact on transaction levels. However, there is no reason why sellers who take advice from an experienced local agent, and price realistically under their guidance cannot still achieve a timely sale.”