Average asking prices by sellers dropped 0.4% in July to £373,493, the first drop since December
Britain’s home sellers cut the prices they’re asking for properties for the first time this year as uncertainty around the election and stubbornly high mortgage rates held back confidence.
Property website Rightmove said on Monday that average asking prices by sellers dropped 0.4% in July to £373,493, the first drop since December.
With interest rates staying at a 16-year high and BoE officials warning about lingering signs of inflation, a budding recovery in house prices ran out of steam in the last few months. A snap election that culminated on July 4 may have also made many home movers more cautious.
Mortgage rates have crept higher since January as the Bank of England pushed back plans to reduce interest rates. While traders put the odds of a cut next month near 50/50, they’re expecting a more gradual loosening by the central bank than at the start of the year.
Tim Bannister, Rightmove’s director of property science, said that a first rate cut since the start of the pandemic and political certainty following the election “could set the scene for a positive autumn market.”
A base rate cut is expected to lead to lower mortgage rates, which could be the game-changer for some would-be home-movers who are being held back by significantly higher monthly mortgage costs, he added.
Despite the drop in asking prices, home sales were still 15% higher on a year earlier, when mortgage costs were near their peak.
While mortgage rates are lower than the 15-year high reached a year ago, they remain at painfully elevated levels for home buyers. According to data from Moneyfacts, the average 2-year fixed mortgage rate has edged up from almost 5.5% in January to 5.92%.
