Why have house prices fallen this month?

We’re in the middle of what’s usually a busy period for the property market, ahead of the quieter summer months when people traditionally head off on holiday. So we often see house prices rise at this time of year, as sellers set their asking prices when there are typically lots of buyers looking to move.

But we’ve actually seen a slightly decrease in the average house price this month, with a drop of £82 bringing the average house price in Great Britain to £372,812. And this is the first time house prices have fallen at this time of year since 2017. You can read our June House Price Index in full here.

Our property expert, Tim Bannister, says: “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, in line with the normal seasonal pattern”.

This small monthly drop in average prices comes at a time when there’s lots happening in the wider economy, and speculation around what this might mean for mortgage rates, and house prices.

We saw mortgage rates edge down throughout April and into May, and it appeared that we were moving into a more settled period for mortgages, after the disorderly period at the end of 2022. However, at the end of May came the news that inflation hadn’t fallen by as much as was hoped, which fuelled predictions that the Bank of England’s Base Rate would need to rise even further. This has led to mortgage rates rising in recent weeks, as lenders reprice their deals in line with the forecasted rate rise.

Read more about interest rates and how they affect inflation here.

Tim says: “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.”

But despite the economic challenges playing out right now, we’ve seen 6% more people enquiring about homes for sale on Rightmove than during the same period in the more normal property market of 2019.

“It’s 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”, adds Tim.

What are the local experts saying?

The recommendation from estate agents is to make sure homes are competitively priced from the time they’re put on the market, to limit the need for a reduction later.

Michelle Gallagher, Managing Director at Chris Davies Estate Agents in Rhoose, says: “Sellers who are motivated to agree a sale soon need be sensible and market their property in line with their local market conditions. While there is now more choice on the market, we still have more buyers than homes for sale, and the stand-out properties are still attracting a queue of people wanting a viewing.”

What’s happening with mortgages right now?

You can keep an eye on the current UK mortgage rates for different deposit sizes here. We list how they compare to last week’s average rates, along with commentary from our mortgage expert, Matt Smith.

And remember, a mortgage broker or adviser can talk through your specific circumstances to help determine the best lender for you, as well as explaining the type of mortgage that might be the best fit.

You can also apply for a Mortgage in Principle online, to give you an idea of how much you could borrow. It’s quick, free, and your credit score won’t be affected.

The header image for this article was provided courtesy of Davis Tate, Henley.

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