House prices in August witnessed a significant dip, marking the most drastic decline since 2009. Alongside this downturn, there was a noticeable slump in buyer interest and sales.

This downtrend in sales was the most pronounced since the initial challenging months of the global pandemic. In terms of duration, properties now take an average of 20 weeks from being listed to closing the deal, a considerable increase from the 16-week average recorded in late 2021.

Estate agents remain sceptical about the likelihood of a market rebound in the upcoming months. Despite the bleak outlook on property sales, the rental market tells a different story.

Rental property demand continues to surpass supply. As a result, agents anticipate a surge in rental prices in the foreseeable future. Currently, the expectations for rental hikes are nearing unprecedented levels.

Sarah Coles, head of personal finance, Hargreaves Lansdown:

“August is always quiet, but this year it was deathly. Higher mortgage rates chased buyers out of the market, and those who remained sat on their hands in the hope that house prices would keep dropping. They’re likely to get what they wish for.

Prices are falling, but not fast enough to convince buyers to take the plunge. Those who are prepared to make an offer are driving a hard bargain. Zoopla figures in June showed 42% were negotiating a price cut of over 5% – the biggest proportion since 2018. Sellers, meanwhile, are refusing to budge as far as they need to in order to secure a sale. It means fewer sales, and it’s taking much longer for property to shift.

Sluggish sales have a knock-on effect, because it gets more difficult to put a chain together. Even when they succeed, it takes so long that buyers get cold feet about paying a price they offered months ago. They want to pull out or renegotiate, and as a result, it’s getting harder to keep chains intact.

There is some hope that the usual pick up in September will make a difference. However, with prices still high and rates only coming down very slowly, we may have to wait longer for buyer enthusiasm to return. The question is how much damage will be done to house prices in the interim.

More stress for renters

Renters continue to have a torrid time of things. Landlords are still selling up, and with a steady stream of new tenants coming to the market, the horrible imbalance of supply and demand continues.

The Bank of England says the flood of landlords out of the market isn’t as dramatic as some are fearing. However, they agree there has been a gradual fall over the past two years, thanks to everything from tougher tax treatment to tighter legislation. There’s every chance that higher mortgages will chase even more of them out of the business. As a result, rents are still soaring, and there’s unlikely to be any let-up soon.”