More buyers as sellers lower the bar
The price of property coming to market has fallen by an average of 1.7% (-£5,222) this month. It is the norm for new seller asking prices to fall at this time of year to attract buyers who are increasingly distracted by the run-up to Christmas. However, this is the largest drop in the month of November since 2012. The backdrop of cooling markets in the South and in the upper price sectors, combined with the political uncertainty, has resulted in new sellers lowering their asking price aspirations earlier than usual. Encouragingly, slightly more sales have been agreed than in the same period a year ago.
Miles Shipside, Rightmove director and housing market analyst commented earlier this week: “New sellers and their agents are reacting to market forces and lowering their pricing aspirations by more and sooner than usual. Stretched buyer affordability and the cooling markets in the South and in upper price brackets have combined with the ongoing political uncertainty to change pricing optimism into pricing realism. This is a welcome effort by sellers to minimise the usual pre-Christmas market slowdown. Some new-to-the-market sellers and their agents have acted early to try to improve the buying mood and avoid the traditional “buyer humbug” dislike of Christmas housing activity.”
Shipside continued: “Seven years ago price rises started rippling out from the capital into the commuter belt in the South East. That ripple effect has now been reversed, with some of the London market price re-adjustment reverberating out into the commuter belt. New sellers of property now coming to market in this region have belatedly lowered their price sights.”
These factors have contributed to the first national year-on-year price fall since November 2011, with the price of newly-marketed property now 0.2% (-£607) cheaper than 12 months ago. With the supply of new-build houses remaining tight, a low interest rate environment combined with near record employment, and average wage increases now rising faster than both CPI inflation and average property prices, the underlying fundamentals for a stable property market remain sound. Indeed the number of sales agreed by Estate Agents was up in October 2018 compared to October 2017, albeit by a modest 1%.
Shipside concluded: “While many thought that the down-to-the-wire Brexit deal uncertainty would hold people back from buying, more buyers have actually jumped in. Some buyers see this pre-Christmas price lull as a gift to their negotiations. It proves that people need to get on with their lives and will continue to buy homes if the underlying economic fundamentals remain strong.”