Market slowdown knocks almost £10,000 off asking prices in two months
Asking prices in the UK fell by 1.5%, or £4,496 this month which means that they are now almost £10,000 lower than in October, the latest monthly index shows.
Year on year asking prices are still 0.7% higher than in December 2017 at £297,527, according to the data from property portal Rightmove.
But the market has seen its biggest fall over two consecutive months since 2012, with Rightmove suggesting that sellers are trying to attract buyers despite a combination of the usual Christmas slowdown, stretched affordability and political uncertainty.
It also points out that there are some signs of cheaper prices tempting buyers in search of a bargain, as number of sales agreed is only down by 2.1% compared to same period a year ago in spite of market challenges.
‘It’s usual for new to the market sellers to price lower in the run-up to Christmas to tempt distracted buyers, so we should not read too much into the mere fact of two consecutive monthly falls,’ said Miles Shipside, Rightmove director and housing market analyst.
‘However, these falls have been larger than usual, making this the largest fall over two months for six years, showing that there are more than just seasonal forces at play. With stretched affordability limiting some people’s ability to buy for the first time or trade up, a modest lowering of property prices combined with an increase in wage growth could help more of them to move and thus increase transaction numbers,’ he added.
A breakdown of the figures show that prices in Greater London are down by 1.8% month on month and down by 1.1% year on year to £602,996 while in the South East they are down 2.1% on a monthly basis and down 0.9% on an annual basis to £389,180.
In the South West asking prices are down 2.2% month on month but up 2% compared to a year ago at £295,324. In the East of England they are down 2.6% month on month and down 0.7% on an annual basis to £341,818.
The market is stronger in Wales with asking prices up by £6.2% compared to December 2017 and on a monthly basis down just 0.3% to £191,927 while in Scotland the market has been more up and down with a fall of 2.7% month on month but still up year on year by 1.1% at £147,114.
Yorkshire and Humber is the only English region where prices are positive on a monthly and annual basis, up 0.1% and 4.8% respectively to £187,143 while in the East Midland there is still strong annual growth of 5.1% but month on month prices are down just 0.7% to £222,511 and in the West Midlands prices are up 4.5% year on year but down 1.4% month on month to £220,668.
In the North East asking prices are down just 0.8% year on year but fell substantially month on month by 3.2% to £143,902 while in the North West they are up 3.1% on an annual basis but down 2.1% month on month to £188,378.
Shipside pointed out that sellers are also faced with downwards price pressure from stretched buyer affordability and political uncertainty. The three regions where property prices went up most since 2012 are now seeing year on year price falls. London, the South East and the East of England are all seeing cheaper new seller asking prices than a year ago.
Indeed, the drag of London and its commuter belt regions keeps the national average annual rate of increase at 0.7% as 2018 comes to an end, despite some significant increases in northern regions.
Shipside pointed out that Rightmove’s forecast for 2018 was that prices would rise by a subdued 1% as lacklustre wage growth and tighter lending criteria could no longer support rising prices in some regions. However, the northern regions are keeping the national figure in positive territory as 2018 draws to a close.
‘We forecast that 2019 will see a similar pattern with the north still broadly out-performing the south, though our prediction for the year ahead is slightly more muted with the overall national average flat at 0%,’ said Shipside.
There are however some signs of cheaper prices tempting buyers searching for a bargain, as the number of sales agreed by estate agents is only down by a relatively marginal 2.1% compared to the same period a year ago despite the market headwinds. There are still buyers in the market for the right property at the right price.