Asking prices for houses in the UK edged higher in October, although demand from first-time buyers has dropped as mortgage rates surge.
Despite the economic turmoil since the government’s mini-budget last month, there has been little immediate sign of the housing market slipping, according to Rightmove.
The property website said that the average price of a property coming to market this month was up 0.9%, to a new record of £371,158, slightly below the average increase for the time of year.
However, Rightmove warned that the effects of wider economic uncertainty could take time to filter through, with some buyers rushing to complete on the back of existing mortgage offers.
Others have predicted that the market will soon decline, with Halifax reporting a marginal decrease in sold prices in September, and surveyors RICS tipping the end of the 13-year UK housing boom next year.
First-time buyer demand was 21% lower in the last two weeks compared with 2021, but still significantly higher than in 2019, Rightmove said. However, it said some new movers had paused their plans in the face of uncertainty over prices and rates.
It said the vast majority of agreed sales were going ahead, with some buyers accelerating the process to ensure they could proceed with lower fixed-rate mortgage offers before they expired. Prices were reduced on 23% of homes on sale, compared with 21% last month.
About 1,000 mortgage deals were removed from sale by lenders last month, after the former chancellor Kwasi Kwarteng’s mini-budget on 23 September spooked financial markets and prompted expectations of far higher interest rates.
Rightmove said asking prices were likely to drop in November and December, in line with normal seasonal price changes, and that there were “more economic events to play out” before forecasting the market in 2023.
Tim Bannister, Rightmove’s director, said: “What’s going to happen to house prices is understandably on the minds of many home-movers right now, especially after the market uncertainty after the government’s mini-budget. There has been no immediate effect on prices, but the trend of a slight softening in the pace of growth continues.
He said it would take time for the market to settle into a more normal level of activity after “two years of market frenzy”, adding: “Some aspiring first-time buyers will have had their plans dashed by the sudden nature of the mortgage rate rises, and now face a difficult situation with rents also rising, and a shortage of available homes to rent.”
