Deathly August means more price falls are on the way

Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the publication of the RICS Residential Market Survey, showing deathly August means more price falls are on the way.

Key points from publication:

• • House price falls accelerated in August – with their most negative reading since 2009. Buyer demand and sales fell sharply too.
  • Sales saw their weakest reading since the first tough few months of the pandemic.
  • Sales are taking 20 weeks from listing to completion on average – up from 16 weeks in late 2021.
  • Estate agents aren’t hopeful that things will pick up again in the next few months.
  • Demand for rental properties powered ahead of supply yet again – and agents expect rents to rise again from here. Rent expectations are close to an all-time high.

Sarah Coles says:

“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.”

Kindly shared by Hargreaves Lansdown