UK property sellers cut asking prices for first time in 2023

LONDON – British property sellers lowered their asking prices for the first time in 2023, an indication that a sharp jump in borrowing costs is cutting in on what buyers can afford to pay.

Property search portal Rightmove said its measure of asking prices fell 0.2 per cent in July after little change in June. Prices nationwide in Britain are still 0.5 per cent above where they were a year ago and have risen steadily since last December.

The figures confirm a trend towards lower prices that mortgage lenders have reported and suggest that home sellers are beginning to pare back expectations for how much they can get. If that sentiment takes hold, it could fuel deeper declines in the market, which has so far defied forecasts for a collapse.

“The interest rate brakes being applied more strongly to slow the economy are now beginning to bite in the housing market,” Mr Tim Bannister, Rightmove’s director of property science, said in a report released on Monday. “The surprise of further mortgage rate rises, when many felt that they had stabilised, contributed to the fall in prices and number of sales agreed.”

The Bank of England has lifted its benchmark lending rate sharply in response to inflation that is taking longer to come down than in most of the Group of Seven nations.

Mortgage rates have risen, and British banks have pared back mortgage availability as they predict more defaults. Rightmove estimates a five-year fixed-rate, 85 per cent loan-to-value mortgage at 5.69 per cent, which is almost a 0.49 of a point higher than in June.

It listed the average price as £371,907 (S$643,200), down £905 in the month. Prices fell by £82 in June, which was the first drop for that month since 2017. They fell more sharply last November and December, traditionally a period when sellers slash prices to complete deals by the year end.

“The market appears to be normalising to pre-Covid levels, where most have time to think and make decisions,” said Ms Hannah Towers, an agency partner at Armistead Barnett in Lancashire.

For now, a shortage of properties up for sale is helping to support prices. Rightmove said its measure of houses for sale was 12 per cent below where it was in 2019. Buyer demand, meanwhile, was “resilient” – 3 per cent higher than in 2019.

“While there’s not the level of demand that there was this time last year, the... buyers that remain are serious and ready to move with their mortgage in principle ready,” said chief operating officer Steph Walker of The Agency UK.

There is still robust interest in buying from some segments of the market, especially from people who are less reliant on borrowing to finance a deal.

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