Although demand from first-time buyers has decreased due to the rise in mortgage rates, asking prices for homes in the UK eked out a slight increase in October.
Even though the economy has been in turmoil since the government released its mini-budget last month, Rightmove reports that there haven’t been many early indications that the housing market is faltering.
According to the property website, the average cost of a house going on the market this month increased by 0.9% to a new record high of £371,158, which is slightly less than the normal growth rate for the time of year.
Rightmove cautioned that some buyers would rush to close on the strength of current
mortgage offers while the impacts of greater economic uncertainty take longer to spread.
Others have projected that the market will soon start to fall, with surveyors RICS forecasting the end of the 13-year UK housing bubble next year and Halifax reporting a slight reduction in sold prices in September.
Demand for first-time buyers in the last two weeks was 21% lower than in 2021, although it was still much higher than in 2019, according to Rightmove. However, it claimed that several recent movers had put a halt to their plans due to pricing and rate uncertainty.
The vast majority of negotiated purchases, according to the report, are proceeding, with some purchasers speeding up the process to make sure they can take advantage of reduced fixed-rate mortgage offers before they expire. Compared to last month, 21% of the properties that were for sale had their prices slashed.
After the brief and previous chancellor Kwasi Kwarteng’s mini-budget on September 23 frightened the financial markets and raised predictions of much higher interest rates, lenders pulled almost 1,000 mortgage offers off the market last month.
Before predicting the market in 2023, Rightmove stated that asking prices were anticipated to decline in November and December in line with typical seasonal price shifts and that “additional economic events to play out.”
Director of Rightmove Tim Bannister stated: “It makes sense that many home movers are concerned about what will happen to property prices right now, especially in light of the market volatility following the government’s mini-budget. Prices have not changed right away, but the pattern of a slightly slower growth rate is still present.
He said it would take time for the market to settle into a more normal level of activity after “two years of market frenzy”, adding: “Some aspiring first-time buyers will have had their plans dashed by the sudden nature of the mortgage rate rises, and now face a difficult situation with rents also rising, and a shortage of available homes to rent.”