Average House Prices in the U.K. Experience Significant Drop

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New data released by online property portal Rightmove reveals that the average house price in the U.K. has fallen by 1.9% (equivalent to £7,012 or $8,938) in the month leading up to August 12. This marks the largest decline in asking prices in a month since 2018.

According to Rightmove, the average price of property entering the market now stands at £364,895, surpassing the usual summer slowdown of a 0.9% decrease. On a yearly basis, house prices have fallen by 0.1%, a significant swing from the 0.5% growth observed in July.

This greater-than-average dip suggests that some sellers are adopting a competitive pricing strategy to attract buyers who may be otherwise preoccupied with holidays, inflation concerns, and the highest interest rates since 2008.

Tim Bannister, the property-science director at Rightmove, explains that while a 1.9% drop in just one month may seem drastic, it is part of the expected seasonal decline as sellers realize they must compromise on price during the traditionally quieter summer holiday period.

The data also reveals variations in asking prices based on buyer types. First-time buyers saw a 0.9% decline on a monthly basis, with average prices reaching £223,614. This figure also represents a 0.2% yearly decrease. Second-stepper prices fell by 0.8% month-on-month to an average of £338,137, while top-of-the-ladder homes experienced the most significant dip, with prices dropping 3.4% to £664,756.

Comparing agreed sales to those seen in the pre-pandemic year of 2019, a clear decline is evident. Agreed sales are currently 15% lower than comparable figures from 2019, worse than the previous month’s 12% decrease. However, first-time buyer demand has been relatively more resilient, with a smaller decline of just 10% compared to 2019 figures. This can be attributed, in part, to record rents and a scarcity of rental properties.

Bannister highlights the affordability challenges faced by many buyers, as evidenced by the lower level of agreed sales. However, he also points out that home ownership remains an attractive option for those who can afford it, particularly given the extremely frenzied state of the rental market with record-high rents.

The data analyzed by Rightmove spans 123,692 prices across the U.K. from July 9 to August 12.

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