Fundamentals remain strong despite 1% drop in asking prices
Higher-than-expected mortgage rates have impacted the market in the first half, but with fundamentals remaining sound and further reductions possible, there’s optimism for the second half ahead, according to Rightmove.
It comes despite a drop of 1% in the average asking price of newly-listed homes for sale in July, down £3,832 to £372,359 – a drop far higher than the average July fall over the last ten years of 0.2%.
Rightmove says this is due to the distractions of new sellers, including recent heatwaves – which caused temporary drops in buyer demand of 8% in May, 6% in June and 4% in July – and the World Cup.
The number of available homes for sale is down 1% from the same time last year, although this is still very close to a 12-year high.
The number of sales agreed in the first half of the year was also down, 6% lower than the same period in 2025. However, this is level to the first half of 2024.
Rightmove said that a combination of factors, including lender competition, wage growth and low unemployment, should drive growth in the second half, although political change adds uncertainty.
Mortgage rates give confidence
The average two-year fixed mortgage rate now stands at 4.92%, up from 4.25% in February before the war began but down from 5.07% last month, which Rightmove says also gives confidence for what’s ahead.
Matt Smith, Rightmove’s mortgage expert, said: “Mortgage rates are higher than many buyers would have hoped for at the start of the year, and the increases due to the war in Iran have understandably dented confidence for some.
“However, lenders remain keen to lend, and the mortgage market is still competitive. There is still uncertainty in the market, and recent mortgage cuts could stop in the near future, however we’re not seeing the kind of difficult lending conditions that have caused more challenging markets in the past. If the outlook shifted and we saw reductions in mortgage rates, it would be a welcome boost to confidence and affordability.”
Nathan Emerson, CEO of Propertymark, is less optimistic however. “While the year initially started with optimism in the housing market, global unease has in many ways dominated the agenda ever since. Rightly so, many consumers have been exercising greater caution with their spending to help ensure household budgets are better protected against unforeseen increases in expenditure.
“In recent months, we have witnessed mortgage borrowing dip significantly, alongside a lower volume of new mortgage approvals. All eyes will be firmly focused on the Bank of England at the end of the month as it makes its next decision on the base rate, something that will very much set the tone, especially for those considering their next house move or who have tracker mortgage products,” he said.
