Asking prices fall in England and Wales, dragged down by drops in London

Asking prices in England and Wales fell by 1.2% or £3,660 this month, the first monthly fall at this time of year since 2013, the latest index shows.

The national fall was exacerbated by London continuing to readjust and smaller falls in the other southern regions, according to the data published by property portal Rightmove.

It appears that his is helping transactions with the number of sales agreed up by 4.8%, higher than this time a year ago in all regions, showing that demand remains strong for the right property at the right price.

The monthly fall takes the average asking price to £310,003 but first time buyers are still paying more with the index showing they paid £194,883 for a home, a rise of 0.3% month on month while second steppers are paying 0.3% less.

However, the national monthly drop excluding London is much smaller, a drop of 0.5%. The London drop is being driven by its continued readjustment particularly in the higher end boroughs, with falls in five out of the six most expensive boroughs this month.

The data shows that asking prices in Kensington and Chelsea fell by 14.3% month on month and are down 10.2% compared to a year ago. The next biggest fall was a drop of 7% in Camden where asking prices are 6.9% down year on year. Hammersmith and Fulham has also seen a substantial annual fall, down 8%, but up 1.5% month on month.

According to Miles Shipside, Rightmove director and housing market analyst, at this time of year it is usual to see estate agents advising new sellers to push up their asking prices. But this year all four southern regions have seen new sellers on average asking less than a month ago, reducing the national rate of increase.

‘There were Autumn price bounces nationally in 2014, 2015 and 2016, but the south of the country has turned this around, whilst some northern regions are still showing marginal signs of upwards price pressure. Estate agents are clearly advising many sellers that they have to lower their price expectations to fit in with buyers’ stretched financial resources, with that price compromise hopefully generating extra buyer interest,’ said Shipside.

‘It’s unavoidable that prices will eventually reach a limit, and having gone up every year for the last six years, the pace of price rises for newly marketed property is now dawdling at just 1.1%. Interest rates cannot realistically drop any further to help buyer affordability,’ he pointed out.

‘Whilst affordability constraints are a major factor in the slowing pace of price rises, demand for the right housing at the right price remains strong due to historic under supply. Some discretionary movers are deterred by lack of choice and the cost of moving, and the political outlook remains uncertain,’ he explained.

‘However, in spite of these factors the numbers of sales being agreed by estate agents are 4.8% higher than the same period a year ago, with all regions being up, including London which is performing strongly at 5.6% up despite its large monthly price fall,’ he added.

‘With competition among lenders to lend, increasing wages and the lowest level of unemployment since 1975, buyers are still keen to buy if the property is worth the money and well presented. If more sellers appreciate that sensible pricing is the best way forward, then this will help to maintain good levels of buyer activity despite the uncertain political outlook,’ he concluded.

But Russell Quirk, chief executive officer of eMoove, pointed out that as the index is based on asking prices it does not necessarily follow that here will be a similar pattern in terms of prices on completed sales.

‘On the contrary to what Rightmove may be reporting, we’ve already seen signs of a bounce back in house prices during the back end of the summer months. As this index is based on asking prices and not data on completed sales, it is important to take it with a pinch of salt where the strength of the market is concerned and not be drawn into any scaremongering based on initial asking prices,’ he said.

‘We are heading into one of the busiest times of year for the UK property market and whilst traditionally many agents may have encouraged sellers to over price to get them on the books, the slower market over the last year has probably put a halt to this. I think many sellers are also realising this and listing their property at a more realistic price from the off, rather than see little interest and have to adjust further down the line,’ he added.

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