Rate rises quash spring price bounce but activity holds up 

• Average new seller asking prices fall by £82 (-0.0%) this month to £372,812, the first monthly drop in asking prices this year and the first drop seen in the month of June since 2017:

• The delayed spring bounce in May has quickly turned into an earlier than usual summer price slowdown.

• Asking prices set to fall in most months for the rest of the year in line with the usual seasonal pattern, and Rightmove still predicts an overall 2% annual drop in new seller average asking prices by the end of 2023

• Despite some significant increases in mortgage interest rates over the last few weeks, Rightmove’s statistics currently show no effect on buyer demand but a slight impact on sales activity:

• Buyer demand over the last two weeks is 6% higher than the same period in 2019’s more normal market

• The number of sales being agreed has dropped marginally, and in the last two weeks is 6% behind the same period in 2019 compared to being 3% behind in May

• The disorderly mortgage market is creating uncertainty among movers with more change expected this week:

• More prospective buyers are checking their latest affordability, with daily visits to Rightmove’s Mortgage in Principle service jumping by 53% since the unexpectedly high inflation figures

• Ahead of this week’s inflation figures and Bank of England Base Rate decision, the average rate for a 5- year fixed 85% Loan-to-Value mortgage at the time of writing is 5.20%, up from 4.56% four weeks ago

Affordability trends

The first-time buyer monthly mortgage payment is based on Bank of England data of the averages for 90% LTV two year fixed mortgages from lenders, and the average asking price of a typical first-time buyer home (two bedrooms or fewer) using the Rightmove House Price Index. The equivalent monthly rent is calculated using the same property types (two bedrooms or fewer). The affordability to buy a first home is based on the Average Weekly Earnings (AWE) dataset from ONS multiplied by 4.5 to get the typical maximum that a person can borrow from a lender. The average asking price of a typical first-time buyer home is taken from the Rightmove House Price Index.

Price & activity trends

Regional trends

London boroughs

Borough data is based on a three-month rolling average and can be used as an indicator of overall price trends in each borough over time. It is not directly comparable with the overall London monthly figures.

Overview

Average new seller asking prices fall by £82 (-0.0%) this month to £372,812. This is the first monthly drop in new asking prices this year, and the first at this time of year since 2017. On average over the previous ten years we have seen an increase of 0.6% in asking prices at this time of year, indicating that buyer affordability constraints and more pricing realism from new sellers have brought forward the usual summer slowdown. There have been some significant increases in fixed mortgage interest rates over the last few weeks following stubbornly high inflation figures, piling pressure onto already very stretched budgets. These increases in rates and monthly mortgage payments may mean that some have to pause their plans for now. However, Rightmove’s latest snapshot of the market suggests the immediate impact on activity has been limited with most movers determined to carry on if they can still afford it.

Over the last two weeks, Rightmove’s statistics show no effect on demand but a modest impact on sales activity as movers navigate the latest mortgage rate rises. The number of buyers enquiring to agents about properties for sale is still 6% higher than the same two weeks in the more normal market of 2019, while the number of sales agreed during this period is 6% lower, a slight drop from agreed sales figures being 3% behind 2019’s levels in May. However, it remains to be seen whether the expected further increase in interest rates will impact these figures further. However, just as rates appeared to be settling, the significant changes in the mortgage market over the last four weeks are creating renewed disruption and uncertainty among movers trying to calculate how much they can afford to borrow and repay. In the last four weeks, the average mortgage rate for a 5-year fixed 85% Loan To-Value (LTV) mortgage has jumped from 4.56% to 5.20%. This means that a new buyer purchasing a property at the current average asking price would now expect to pay an extra £117 per month if repaying the mortgage over a 25-year term. By comparison, the average rate for the same mortgage product changed from 4.50% to 4.52% over the previous four weeks, highlighting how quickly the mortgage market has become more uncertain. This is leading more prospective buyers to check their current affordability, with daily visits to Rightmove’s Mortgage in Principle service up by 53% compared with before the unexpectedly high inflation figures.