Buyer affordability is on the upswing as mortgage rates decline and property prices dip, according to the latest data from Rightmove, offering a positive outlook.
Rightmove’s data reveals that the average five-year fixed mortgage rate has dropped to 5.81%, down from 6.08% just three weeks ago, signalling an encouraging trend.
Moreover, housing prices are also experiencing a decrease, with the average asking price for new sellers dropping by 1.9% (-£7,012) this month to £364,895. This is the most significant August decline since 2018, as sellers in the summer season aim to entice buyers amid concerns about holidays, inflation, and the highest Base Rate since 2008.
These lower asking prices, combined with rising average earnings and the apparent decline in mortgage rates, represent “promising steps” toward improved buyer affordability, according to Rightmove. However, it’s worth noting that average prices are still £59,000 (19%) higher than they were in the pre-pandemic market of August 2019.
Additionally, while the number of sales being agreed is 15% lower compared to this time in 2019, before the COVID-19 pandemic, the first-time buyer sector is holding up slightly better, with sales agreed down by only 10%. In fact, the number of buyers making enquiries to agents about properties for sale in this sector remains 1% above the levels seen in 2019.
Rightmove also points out that there is no oversupply of homes for sale, as the number of available properties is still 10% lower than it was at this time in 2019. Agents report that attractively priced homes in popular areas are enticing buyers who are eager not to miss out on these opportunities.
Indeed, their data indicates that homes priced appropriately from the start take less than half the time to find a buyer compared to those that require subsequent price reductions.
Tim Bannister, Rightmove’s Director of Property Science, commented, “While challenges remain in saving up for a deposit and managing higher mortgage payments, potential buyers are likely to find a wider range of properties in their area, better suited to their needs compared to the pandemic period.” He added, “Although there’s more choice, there’s no oversaturation of properties for sale. The number of available properties is still lower than in 2019, and homes are selling more quickly, with the average time to find a buyer now at 55 days, compared to 61 days in 2019.”
While a 1.9% drop in just one month may appear significant, it’s partly due to the expected seasonal decrease as sellers acknowledge the need to adjust their prices during the traditionally quieter summer holiday period. Agents report that appropriately priced homes in many areas are still attracting multiple interested buyers, so if potential buyers come across a suitable and affordable property, they may need to act promptly instead of waiting.