Average prices up 1% but mortgage rates bite

Average house prices rose 1% in October, up +£3,575 to £371,015, however the figure is down 0.1% annually while rising mortgage rates are adding pressure for buyers with rates now up to 5.55% for a two-year fix, according to Rightmove.

The increase has added around £250 a month to buyers’ mortgage payments since February, when rates were 4.25%.

Rightmove said the higher costs were impacting regions that had previously proved relatively resilient this year. In four of the five lowest-priced areas, new buyers set lower asking prices this month – with average prices in the North East down 2.0%, Scotland 1.9%, the North West 0.6% and Wales 0.3%. Yorkshire and the Humber was the only one of the lowest-price areas where prices rose, up by 0.3%.

Colleen Babcock, Rightmove’s property expert, said: “The rapid rise in mortgage rates is really beginning to hit buyers’ budgets. We’re now seeing mortgage rate rises feed through to seller pricing in many of the cheaper parts of Great Britain, where prices had been more resilient this year.

“It’s an early sign that higher mortgage costs are putting pressure on affordability even in markets with lower property prices, affecting the areas and types of property that buyers can afford. This is a stark reminder of how price-sensitive the market is, and the message from agents, backed up by our data, remains the same – that competitive pricing from day one of marketing is critical to capitalise on initial buyer interest.”

London price rises follows 6% summer fall

The largest monthly price rise was in London, up 2.5% after prices in the capital slumped 6% during July and August. However, prices remain 1.7% below what they were last year, making London the weakest performing region annually once again.

The capital is seeing 38% of listing prices reduced, an average of 78 days to find a buyer and less than half (42%) of properties actually selling.

More widely, the number of sales agreed is 8% lower than a year ago, the number of new potential buyers contacting agents about properties is 9% down, but the number of new listings coming to market is 3% higher. That keeps the total number of homes available for sale at its largest peak for the time of year since 2014.

Matt Smith, Rightmove’s mortgage expert, said that alongside the forthcoming budget other factors were making it hard to predict where the market will go next. “The fact that sales activity hasn’t fallen back further so far shows that many people still want to get on with their move. Monthly budgets are going to be stretched, but the market is incredibly hard to predict, particularly with so many complex global factors affecting the cost of borrowing, so home-movers must also concentrate on what’s in front of them.”