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Property Sellers Unfazed by Falling Prices and Rising Mortgage Rates

According to Rightmove, the average asking price for properties dipped by a mere £82 in June, despite the unsettling increase in mortgage rates. Rightmove’s house price index for June reveals an average asking price of £372,812, an annual increase of 1.1%. However, it anticipates a 2% drop by the end of the year. In London, the average asking price declined by 1.6%.

The property platform noted a steady buyer demand over the month, marking a 6% increase compared to the same period in 2019. Nevertheless, the number of property sales was 6% lower than in 2019.

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, expressed concerns over sellers dismissing the market’s changing conditions. “Sellers are determined to ignore the elephant in the room – even though it’s pinning would-be buyers to the ground, and squeezing the life out of the market,” she commented.

With the average two-year fixed-rate mortgage inching close to 6%, she foresees significant impacts on buyers, with many potentially finding themselves priced out of the market. She added, “Plenty of sellers have refused to acknowledge this shift in the market, and are still pricing their homes at an average of £372,812 – up 1.1% in a year. It remains to be seen whether they’ll find buyers at this level, or whether we’ll see prices cut as reality dawns.”

Coles also highlighted the disparities between Rightmove’s outlook on buyer demand and figures from the Royal Institution of Chartered Surveyors (RICS). “Rightmove tends to reveal a rosier picture of buyer demand than separate figures from RICS. However, even Rightmove says demand has remained flat in recent weeks,” she said.

Jean Jameson, Chief Sales Officer at Foxtons, offered a more optimistic view of the situation, stating, “The market is busier than expected and the volume of sales across London is in line with what we saw last year, despite the rise in interest rates.” She noted that Foxtons’ housing stock has significantly grown year-on-year without witnessing a considerable rise in distressed sellers due to the interest rate hike. Jameson also pointed out that since the mini-budget, sellers have had to be “slightly more competitive” with their pricing to attract potential buyers.