The average price of property coming to market dropped by 0.2% this month, slightly below the typical 0% change for this time of year, driven by sellers adjusting their price expectations due to rising mortgage costs and increased buyer affordability constraints.
The increase in the Base Rate to curb higher-than-expected inflation is affecting the housing market. The number of sales agreed is now 12% less than the 2019's market, despite a strong first five months in 2023.
However, buyer demand remains strong and is 3% higher than in 2019, largely due to a shortage of available properties. Properties priced correctly are still attracting motivated buyers.
The availability of properties for sale is 12% lower compared to the same period in 2019.
Sellers who initially over-price their properties are more than 10% less likely to find a buyer than those priced correctly from the outset, highlighting the importance of right pricing.
The average interest rate for a five-year fixed, 85% Loan-To-Value mortgage on Rightmove's mortgage tracker has risen by 0.49% to 5.69% from the previous month, causing some movers to wait until rates stabilize.
The mid-market and top-tier sectors, where people are significantly increasing their mortgages, have been most impacted by lower sales levels, with agreed sales falling 14% behind 2019's level. Some potential buyers in these sectors are reassessing their budgets due to potential changes in mortgage rates.
The market for smaller homes (two-bedrooms and fewer) is less impacted, with sales being 9% below the 2019 level. This resilience is attributed to first-time buyers' determination to enter the property market and early retirees looking to downsize.
Despite a slowdown in sales, there isn't an oversupply of properties. Properties priced appropriately for local market conditions continue to attract interest.
Agents report that the latest interest rate rise has caused caution among buyers and sellers, leading to more careful planning and budget adjustments. However, a shortage of correctly priced properties remains, and the pool of remaining buyers is serious and ready to move.
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