This month’s price drop compares to an average increase in June of 0.4% over the last ten years. However, it follows stronger than expected price growth in April and May, which appears to be in part a delayed response to increased stamp duty tax in England from April. The continued decade-high level of buyer choice is also continuing to put downwards pressure on prices.
It appears that more competitive pricing is helping sales activity, with May seeing the strongest month of sales agreed since March 2022. Some segments of the property market are performing more strongly in terms of pricing than others, driven by buyer affordability and supply levels. With more new sellers still coming into the market than new buyers, pricing realistically remains key for a successful sale.
The higher-priced South West, South East and London regions have seen the largest price drops this month. Buyers in these regions are disproportionately affected by April’s stamp duty changes, and some sellers may be adjusting their prices downwards to account for this.
These three regions have also seen the largest increases in available homes for sale compared to last year, with rising supply levels putting downwards pressure on prices. Increased stamp duty charges on investment and second homes, as well as higher council tax on second homes in some coastal hotspots like Cornwall and Devon, are likely contributing to the higher number of properties now up for sale.
By contrast, property prices have risen the most this month in the more affordable North West, Wales, and Yorkshire & The Humber. These regions are less affected by stamp duty increases, and in the case of Wales, not at all affected. The number of available homes for sale in these regions is also up less substantially versus last year than in southern England. The overall average asking price for a home is still 0.8% ahead of this time last year
Rightmove’s Colleen Babcock said: “It appears that we’re now seeing the decade-high level of homes for sale, and the recent stamp duty increases in England, have a delayed impact on new sellers’ pricing. Prices have fallen this month after the new records set in April and May.
“Agents have been telling us that sellers need to set a competitive price to have a better chance of finding a buyer in the current market, and it looks like many are listening and responding to that message. Such realistic pricing will remain key in the coming months. Underneath the headline figures, we can see regional variations in price changes this month, which appear closely linked to buyer affordability and supply levels.”
Buyer activity remains resilient, with affordability improving for some. Average wages are rising faster than house prices, and many lenders are loosening their affordability criteria. May was the strongest month for the number of sales being agreed since March 2022, and 6% ahead of the same month last year. This suggests that despite the high volume of homes for sale, properties that are priced right and presented well are continuing to attract serious buyers.
The number of new buyers entering the market in the month of May was also 3% ahead of the same period last year. However, the number of homes coming onto the market for sale is 11% ahead of the same period last year, with the number of new buyers still being outpaced by new sellers.
With buyer choice so high, the market is very price sensitive, especially with some mortgage rates slightly rising over the last few weeks. Rightmove’s weekly mortgage tracker shows that the current average five-year fixed interest rate is 4.61%, only slightly down from last year’s 5.04%. Sellers need to continue doing all that they can to make sure that their listing stands out to potential buyers as better value than similar properties.
Rightmove’s data shows the impact of coming to market with a competitive price, a well written description, and attractive images that encourage a potential buyer to enquire about a viewing immediately. Homes that receive an enquiry on the first day of marketing are 22% more likely to successfully find a buyer than homes which take more than two weeks to receive their first enquiry.
Babcock added: “It’s an encouraging market for those looking to buy, with a very good choice of homes for sale, which also means they have good negotiating power. Some buyers with a home to sell in the current high-supply market may achieve a lower price on their own sale, but could look to offset that by negotiating a comparable discount on their purchase.
“The fact that sales are being agreed not only at a good level, but at the strongest level since March 2022, is a really positive sign that many are getting their sales tactics right. Rightmove’s analysis shows that homes which are marketed as effectively as possible and priced right at the start of marketing will get the all-important early interest that vastly increases the likelihood of finding a buyer.”
Property industry reacts to new Rightmove House Price Index
