The “disorderly” mortgage market has left properties sitting on the market for longer and forced sellers to cut their asking prices, new data shows.
Average asking prices have dropped by £82 this month, according to Rightmove, which, though small, represents the first decline in June since 2017.
Meanwhile, more than half of properties are now taking longer than a month to attract an offer, according to separate data from property portal OnThe Market. The proportion of houses taking longer than 30-days to go under offer has jumped from 39pc last month to 58pc today.
Experts blamed surging mortgage rates, which have left buyers uncertain about how much they can borrow. Rightmove said the “disorderly mortgage market is creating uncertainty among movers with more change expected this week”.
The average for a two-year fix was today expected to cross 6pc after hitting 5.98pc on Friday, according to Moneyfacts.
Rates are set to climb even higher, with the Bank of England expected to raise its base rate to 4.75pc this week. Financial markets predict it could climb as high as 6pc.
Demand in the housing market has held up well despite rapidly rising mortgage rates in the last few weeks and remains 6pc above the same period in 2019, according to Rightmove.
However, agreed sales are down 6pc compared with the same period as rapid changes in the market make completing deals more difficult.
The average new home hit the market for £372,812 in June, according to Rightmove.
Tim Bannister at Rightmove said asking prices are expected to fall by 2pc over the year, amounting to a drop of thousands of pounds on each property. He said:
Agents report that new sellers are sitting in two camps – those who still have over-optimistic 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.
OnTheMarket chief executive Jason Tebb stated: “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.”
