London home sellers are asking for the same price this as they were the same time last year, rising just 0.5 per cent to £685,200.
Meanwhile inflation is currently running at 8.7 percent.
More than a third of London boroughs (13) saw asking price drops, while four more saw no change in price or growth of less than half a per cent.
The biggest price drops were in London’s outer boroughs, with Harrow seeing the biggest drop of 4.1 percent to £613,300. Barnet saw prices down 2.5 per cent, to £727,000, while asking prices in Havering fell 2.2 per cent to £477,900.
Hounslow (down 2.1 per cent to £596,900) and Enfield (down 1.8 per cent to £501,500) made up the five biggest fallers.
In a reverse to trends seen in more recent years, several inner London boroughs saw their asking prices rise, with Hackney topping the table with price growth of 4.4 per cent taking the average price tag to £732,000.
Across Britain, average new seller asking prices recorded a fall of £82 in June, marking the first monthly decrease seen in 2023, Rightmove said. The fall took the average asking price to £372,812.
The property portal said it is the first price drop at this time of year since 2017.
On average over the previous 10 years, it has seen an increase of 0.6 per cent in asking prices at this time of year.
Rightmove pointed to mortgage rate rises and stubbornly high inflation piling pressure on to already very stretched budgets.
Tim Bannister, Rightmove’s director of property science, said: “Average new seller asking prices, the first and leading indicator of new trends in the market, have dropped slightly this month, signalling that the belated spring price bounce has quickly turned into an earlier-than-usual summer slowdown.
“We expect asking prices to edge down during the second half of the year which is the normal seasonal pattern, and while we sometimes re-forecast our expectations for annual price changes at this time, current trends suggest that our original forecast of a two per cent annual drop in asking prices at the end of 2023 is still valid.
“Agents report that new sellers are sitting in two camps – those who still have overoptimistic price expectations following the buoyant pandemic market, and those who have adapted to the new conditions and are coming to market with a competitive price. Sellers who price competitively are much more likely to find a suitable buyer quickly before their home appears stale, and they can often then negotiate on price on any onward purchase.”
Rightmove said that, over the past two weeks, its figures indicate no effect on demand but a modest impact on sales activity as movers navigate the latest mortgage rate rises.
The number of buyers inquiring to agents about properties for sale is six per cent higher than the same two weeks in the more normal market of 2019, while the number of sales agreed during this period is six per cent lower.
The next Bank of England base rate decision is due on Thursday – and Rightmove said that it remains to be seen whether an expected further increase in rates will impact the website’s figures further.
It is likely to feel very frenetic for those taking out a mortgage right now, as they try to quickly lock in the best rate that they can find
Mr Bannister added: “We expected some more twists and turns this year and we’ve had several in the last month, including stubbornly high inflation figures, surprisingly large average wage increases, and their eventual impact on mortgage interest rates and availability.
“We expect that there may be more change to come depending on this week’s inflation figures and the Bank of England base rate decision.
“It is likely to feel very frenetic for those taking out a mortgage right now, as they try to quickly lock in the best rate that they can find. Although the impact of higher mortgage rates on activity levels has been limited so far, with prospective buyers who can still afford to move appearing determined to go ahead, it remains to be seen how movers will respond to the expected further rate rises.”
Tom Bill, head of UK residential research at Knight Frank, said: “Recent rate volatility hasn’t yet had a material impact on housing market activity because, if anything, those holding mortgage offers are keen to move sooner rather than later.
“That said, sentiment has taken a hit in recent weeks, which will keep a lid on trading volumes later this year.
“Ironically, strong wage inflation rather than the mini-Budget is now the main brake on the housing market although the outlook will only become clearer this week. Those buying, selling or re-mortgaging will hope the Bank of England isn’t faced with a second ugly underlying inflation reading on Wednesday.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: ”As expected, recent mortgage market turbulence is dampening the increase in prices and activity which we would usually see at this time of year.
“However, these are, of course, only aspirational not achieved values. On the street, prices are softening as cash and equity-rich buyers in particular continue to hold sway over those relying on increasingly hard-to-obtain loans.
“Negative publicity is helping lower expectations and encourage more seller realism.”
