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Property Market Update: Rightmove Reports Falling Prices Amid Borrowing Costs

Aug 26, 2023

Welcome to The Skinny. I might be in Spain this week, but my head is firmly planted in the UK property market. 👇 

Today I bring you the latest insights into the dynamic UK property landscape. In this edition, we delve into the significant changes witnessed in property prices and market activity, as reported by Rightmove.  

**Rightmove's Latest Report: Prices See Notable Drop Due to Borrowing Costs** 💷🏠 

According to the recent report from Rightmove, the average asking price of properties entering the market experienced a decline of 1.9% in August. This reduction, amounting to £7,012, marks the most substantial monthly price drop since August 2018. Interestingly, this decline surpasses the usual summer lull, which has historically seen an average decrease of 0.9% in August over the years. 

The new average asking price now stands at £364,895.

**Factors Behind the Decline**🏠📉 

Experts attribute this trend to two key factors: persistently high inflation and the Bank of England's highest interest rate since 2008, now standing at 5.25%. The heightened interest rates have contributed to an increase in the cost of borrowing, which in turn has deterred potential buyers from participating in the housing market. 

Despite the consistent drop in average asking prices since May, it is important to note that many sellers remain cushioned due to substantial house price inflation observed in recent years. On average, current asking prices are still 19% higher than they were in August 2019, equivalent to an impressive £59,000 increase.

**Market Dynamics and Trends**🏠📉  

The property market is witnessing some distinct changes. Rightmove data reveals that the number of agreed sales has decreased by 15% compared to 2019, a time considered more 'normal' before the onset of the Covid pandemic. However, the first-time buyer market appears to be demonstrating resilience, with a relatively lower decline of 10%. Remarkably, the number of first-time buyers inquiring about properties for sale has even surpassed 2019 levels by 1%. 

This heightened interest from first-time buyers is attributed to record-high rents, which have surged by 33% since 2019, coupled with a shortage of available rental properties. 

In terms of inventory, the number of available properties for purchase is approximately 10% lower than in 2019. Additionally, the average time it takes to secure a buyer has increased to 55 days, up from 33 days just a year ago. Notably, homes that are priced realistically from the outset are finding buyers in less than half the time compared to those that require a price reduction. 

**Regional Insights**  

Rightmove's data points towards a consistent trend of falling prices across most UK regions in August. Notably, Scotland, Wales, and the North East experienced marginal price increases of 0.8%. Among the regions that saw the largest monthly declines were London and the South West, with reductions of -2.3% and -3.2% respectively. London retains the highest average asking price, reaching £672,961.

**In Summary**🏠

The lower level of agreed sales compared to 2019 highlights the affordability challenges faced by many potential buyers. However, the rental market is experiencing unprecedented frenzy with record-high rents. 


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