Monday 20th June Rightmove House Price Index - Industry reaction

The latest index shows that: -

Price of property coming to market hits a fifth consecutive record of £368,614, albeit only up by a modest 0.3% in the month (+£1,113), as the pace of price growth slows
Affordability constraints, a better balance between supply and demand, and usual seasonal price drops will contribute to further slowing of price growth in coming months, with annual growth still on track to be 5% by the end of the year:
- Buyer demand for each available property is down by 8% in May compared to April, but remains 6% higher than last year, and more than double (+113%) the pre-pandemic five-year May average
- In addition, there are signs of more fresh choice for buyers, with the number of properties coming onto the market for sale up by 7% compared to this time last year, but still below 2019 levels
Conveyancing log-jam means sellers need to come to market in the next few weeks to be in with the best chance of moving before Christmas, with the average time to get through conveyancing currently 150 days
- More than 500,000 homes are currently sold subject to contract, which is 44% higher than 2019

Director of Henry Dannell, Geoff Garrett, commented:

“With a string of small but consistent interest rate increases coming in quick succession, the cost of borrowing is now substantially higher than it was just six months ago.

This will inevitably have an impact on the housing market and the price buyers are willing to pay and we’ve already seen mortgage approvals fall by an average of 3.4% over the last three consecutive months.

Although sellers are yet to adjust their price expectations in line with this declining demand it’s only a matter of time and expect buyer demand will continue to slowly reduce over the course of the year, thus dampening the extraordinary rates of house price growth seen in recent times.”

Managing Director of Barrows and Forrester, James Forrester, commented:

“There’s certainly nothing seasonal about the current slow in property market activity and a fifth consecutive base rate increase will now cause buyers to tread with even greater caution when entering the market.

However, it’s fair to say that the UK property market remains in good health at present. Having accelerated at alarming speeds during the pandemic, the current slowdown is more a case of observing the speed limit and returning to normality, rather than grinding to a complete halt.”

Director of Benham and Reeves, Marc von Grundherr, commented:

“A marginal uplift in stock availability will do little to address the heavily skewed demand-supply balance of the UK property market and so we can expect to see buyers continue to fight tooth and nail to secure a property in current market conditions.

Once they do, they can expect to remain in home buying limbo, stuck between having their offer accepted and actually completing, as the protracted and archaic legal requirements of the conveyancing process continue to cause significant delays.”

Christina Melling, CEO of Stipendium, commented:

“Growing economic uncertainty and increasing mortgage costs are yet to knock the property market which has been awash with activity throughout the pandemic. This will be welcome news for many, except the nation’s first-time buyers, who have seen the cost of getting a foot on the ladder grow by more than nine per cent in the last year alone.

The outlook for this beleaguered segment of the market is bleak, to say the least. Not only is the initial cost of a deposit still incredibly high, but they now face substantially higher mortgage payments once they have secured a foot on the ladder.”

Managing Director of HBB Solutions, Chris Hodgkinson, commented:

“Having enjoyed a housing market heatwave over the last two years, homebuyers and sellers alike would be ill-advised to ignore the dark clouds that are building on the horizon.

While price growth remains positive at present, it’s only a matter of time before market sentiment starts to buckle, as buyers get cold feet following a fifth consecutive interest rate increase.

When they do, we can expect to see a drop in both transactional volume and the price being paid for a property, as well as a significant uplift in sales collapsing, as cautious buyers and over-optimistic sellers fail to see eye to eye.”