Rightmove: this isn’t really a house price rise

Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the publication of the Rightmove latest monthly House Price Index, showing this isn’t really a house price rise.

Key points from publication:
    • The average asking price of newly listed properties rose 0.4% in the month to September. 
    • It’s still down 0.4% in a year to £366,281, but Rightmove estimates that asking prices will fall just 2% this year.
    • However, this isn’t a measure of selling prices. More than a third (3%) of properties have had price cuts – the most since 2011. The average cut is £22,700 or 6.2%.
Sarah Coles says:

“This isn’t a house price rise.

“It’s an indication of how desperate sellers are to defy the miserable realities of the housing market right now.

“Sky-high mortgage rates mean demand has dropped like a stone, house prices have fallen, and sales have dried up.

“However, not all sellers are prepared to accept it right now – so asking prices are up over the past month.

“Reality lurks in the fact that over a third of people have chanced their arm by setting an overly optimistic asking price – and then been forced to cut it.

“An average drop of 6.2% highlights the gulf between optimism and reality.

“This mispricing is gumming up the works, so sales are sluggish – down around a fifth (18%) in a year.

“It means homes are taking 57 days to find a buyer, up from 35 in the same month a year earlier.

“It’s perfectly understandable.

“When we’ve seen prices rise so far and so fast, there’s the temptation to cling to the hope that they’ll keep doing so – at least until you’ve had the chance to sell.

“In reality, however, prices have turned, and if sellers don’t realise this up-front, they’re likely to sell for less in the end.

“They’ll waste the initial interest in their property, because buyers will baulk at the price.

“They’ll then have to cut – at least once – which buyers may read as off-putting levels of desperation.

“Being too optimistic can be an expensive mistake in a market like this one.”

 

Kindly shared by Hargreaves Lansdown