New data reveals that the mortgage market is facing disorder, resulting in longer property listing durations and reduced asking prices. Rightmove reports a £82 decrease in average asking prices this month, marking the first June decline since 2017. Additionally, OnTheMarket data indicates that over 50% of properties now take longer than a month to attract offers, with the proportion of houses taking more than 30 days to secure an offer increasing from 39% to 58%.
Experts attribute these challenges to the surge in mortgage rates, leaving buyers uncertain about borrowing capacities. Rightmove warns that the “disorderly mortgage market is creating uncertainty among movers, with more changes expected this week.” The average two-year fix is projected to surpass 6% after reaching 5.98% on Friday, according to Moneyfacts. Furthermore, the Bank of England is anticipated to raise its base rate to 4.75% this week, with financial markets predicting it may climb as high as 6%.
Despite the rapidly rising mortgage rates, demand in the housing market remains resilient and is 6% higher than during the same period in 2019, as reported by Rightmove. However, agreed sales have declined by 6% due to the market’s volatile nature, making it more challenging to complete transactions.
In June, the average new home listed on Rightmove had a price tag of £372,812. Tim Bannister, an analyst at Rightmove, predicts a 2% decrease in asking prices over the year, translating to a substantial drop in property value. Bannister explains:
Agents report that new sellers fall into two camps – those holding onto over-optimistic price expectations from the buoyant pandemic market, and those who have adjusted to the new conditions and are selling competitively. Sellers who price their properties competitively have a higher likelihood of attracting suitable buyers quickly, avoiding the risk of stale listings, and often negotiate on the price of their subsequent purchase.
Jason Tebb, the CEO of OnTheMarket, cautions that the next three months may prove more challenging than anticipated, potentially negatively impacting transaction volumes.
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