Significant Dip in Average Property Prices Observed during July, According to Rightmove Data Over Past Two Decades
In the realm of the UK property market, there's a palpable sense of returning to normalcy, as indicated by Nathan Emerson, CEO of Propertymark. The market has been adjusting in response to the hikes in stamp duty that took effect in April, and this shift is evident in the 5% increase in sales agreed upon compared to last year.
However, the month of July 2022 saw a significant drop in average asking prices, with Rightmove, a real estate company boasting over 20 years of data, recording the highest-ever monthly decline. This drop extended to Greater London, where asking prices fell by 1.5%, and the prime inner London property market experienced an even more pronounced decrease of 2.1%.
This downturn in asking prices can be attributed to several key factors. Firstly, the increased property availability and choice for buyers, as local experts note significantly higher stock levels compared to the previous year. This abundance of options has necessitated sellers to price their properties more competitively to attract buyers.
Secondly, despite improving affordability, buyer activity has slowed, leading to slower house price growth and sellers reducing prices to stimulate interest. The recent stamp duty changes have indeed boosted buyer registrations and viewings, yet this influx of listings has resulted in a more balanced market, favouring buyers.
Thirdly, market uncertainty ahead of policy announcements, such as the Autumn Budget, has been dampening demand, causing sellers to lower their asking prices. Furthermore, while forecasted Bank of England interest rate cuts in early August 2025 are expected to make mortgages cheaper, encouraging new buyers to enter the market, this has not yet reversed the current price declines or stock increases.
Despite these challenges, the markets anticipate the Bank of England's Monetary Policy Committee to cut interest rates twice more this year, potentially stimulating further property market activity. With such a vast array of choices, buyers are taking their time and viewing more properties before making decisions, while serious and motivated sellers are pricing sensibly and finding success.
Notably, asking prices in the capital have decreased by 1.1% year-on-year, and the North West and South West saw asking prices fall by 1.2% and 1.1% respectively, on the month. In contrast, the East Midlands remained steady, and the North East even saw a growth of 1.2% since last month and 2% since last year.
The average asking price for UK properties in July 2022 was £373,709, a decrease of 1.2% from the previous month and only 0.1% higher than the same month last year. Every UK region apart from the North East and East Midlands saw average asking prices fall.
In light of these developments, Rightmove has reduced their house price forecast for 2025 down from 4% growth to just 2% due to the increasingly competitive marketplace. Despite the current challenges, Nathan Emerson, CEO of Propertymark, remains optimistic, stating, "It's good to see yet further resilience in house prices year on year."
- The drop in average asking prices, as observed in July 2022, might lead potential investors to reconsider their strategies in the UK housing-market, as the real estate market adjusts to various factors such as increasing property availability, slowing buyer activity, and market uncertainty ahead of policy announcements.
- Savings could potentially be a more attractive option for some individuals due to the current state of the property market, as the increase in property stock levels and the slowing house price growth means that it may be a less competitive and potentially less costly time to invest in real-estate.
- While the projected two additional interest rate cuts by the Bank of England in 2022 might make mortgages cheaper and encourage new buyers to enter the property market, they might not immediately reverse the current price declines or stock increases, making it crucial for investors to closely monitor developments in the finance sector to make informed decisions.
