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 Rising mortgage rates are cooling the UK housing market, bringing forward the usual summer slowdown in the housing market. Asking prices for British homes fell in June for the first time in six years, property website Rightmove reports this morning.
Rightmove’s latest data shows that average new asking prices dipped, slightly, this month for the first time this year. It suggests that some sellers are pricing their properties a little more competitively, as higher borrowing costs dampen the market. Average new seller asking prices slipped by £82 this month to £372,812. This is the first monthly drop in new asking prices this year, and the first at this time of year since 2017, Rightmove reports.
The number of sales being agreed has dropped marginally, and in the last two weeks is 6% behind the same period in 2019; twice as fast as the 3% drop recorded in May. On average, over the previous 10 years prices have risen by 0.6% at this time of year.
Rightmove suggests that constraints on buyer affordability due to higher borrowing costs, and “more pricing realism from new sellers” have brought forward the usual summer slowdown.
Tim Bannister of Rightmove explains: "Average new seller asking prices, the first and leading indicator of new trends in the market, have dropped slightly this month, signalling that the belated spring price bounce has quickly turned into an earlier than usual summer slowdown. We expect asking prices to edge down during the second half of the year which is the normal seasonal pattern, and while we sometimes re-forecast our expectations for annual price changes at this time, current trends suggest that our original forecast of a 2% annual drop in asking prices at the end of 2023 is still valid.
The squeeze on borrowers is expected to worsen this week, with the Bank of England expected to raise interest rates on Thursday from 4.5% to 4.75%. One Conservative MP warned last weekend that Britain is heading for a “mortgage catastrophe”, due to the surge in borrowing costs this year.
Lucy Allan, the Tory MP for Telford, said:“I don’t think we have quite understood the interest rate catastrophe. People [are] telling me their monthly mortgage payment is exceeding their salary. That is unsustainable.“
"Constituents do ask about ‘support for unaffordable mortgages’. I say ‘talk to your lender,’ but the reality is they need to sell sooner rather than later and that’s a hard message to hear.”
But PM Rishi Sunak this morning ruled out providing any extra help for households who are struggling with mortgage payments. Speaking on ITV’s Good Morning Britain, the prime minister declined to back extra support for mortgage holders. Instead, he said the government needs to “stick to the plan”, and that his top priority remains bringing inflation down.
More than a quarter of UK homeowners on a fixed-rate mortgage are heading for sharp increase in monthly payments before the next election. Figures shared with the Guardian by UK Finance, the banking industry trade body, show more than 2.4m fixed-rate homeowner deals will expire between now and the end of 2024.
According to the Resolution Foundation, total annual mortgage repayments are now on course to rise by £15.8bn by 2026, as households move to new, higher fixed-rate deals. That means an extra £2,900 cost for the average household remortgaging next year.
Rightmove’s monthly house price report also shows regional differences in the markets. In London, average asking prices fell by 1.6% in the month, while they dropped 0.6% in the East Midlands and by 0.5% in Yorkshire and the Humber region. But average asking prices rose 4.9% in the North East, followed by a 1.8% gain in Wales.
The agenda
• All day: Paris Air Show
• 9am BST: ECB Survey of Monetary Analysts
• 3pm BST: NAHB/Wells Fargo index of US housing market
We’ll be tracking all the main events throughout the day ... |
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