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Asking prices for homes in Britain tumbled in the biggest August fall since 2018 this month as soaring mortgage costs put buyers under pressure, according to a property website.
Rightmove said average new seller asking prices fell by 1.9%, or £7,012, on average to £364,895 in August.
The fall is more than double the seasonal 0.9% drop seen in August due to the traditional summer slowdown, according to the group.
There are still significant challenges in saving up enough for a deposit and affording higher mortgage payments
Tim Bannister, Rightmove
The housing market is suffering as buyer demand and spending power is being hit by the cost-of-living crisis and mortgage rates that have surged to 15-year highs in recent months.
Mortgage deals have eased back from the peak seen in July, with the average five-year fixed mortgage rate now at 5.81%, down from 6.08% three weeks ago.
But demand is still being weighed on across the property market and many sellers are pricing more competitively to tempt buyers against the backdrop of holidays and cost woes.
Rightmove said the number of sales being agreed is now 15% lower than at this time in 2019, with many putting their moving plans on hold.
The first-time buyer sector is down by a more muted 10% compared with 2019 as rents have jumped 12%, tempting many to look at getting on the property ladder in spite of higher mortgage costs.
Tim Bannister, Rightmove’s director of property science, said: “There are still significant challenges in saving up enough for a deposit and affording higher mortgage payments. However, would-be buyers are now likely to see greater property choice in their area and therefore a home more likely to suit their needs compared to during the pandemic.
“But while there is more choice there is no glut of properties for sale, with the number of available properties still lower than at this time in 2019 and homes still selling more quickly, with the average time to find a buyer now 55 days compared to 61 days in 2019.”
He added: “While a 1.9% drop in just one month seems dramatic, it’s in part an expected seasonal drop as sellers coming to market realise that they have to compromise on price due to the traditionally quieter summer holiday period.”
The latest report showed that asking prices in the first-time buyer sector have held up better than in the wider market, down by 1% versus a year ago, which it suggests is due to the “staggering” rent rises.
Mr Bannister said: “With sales holding up more strongly in the typical first-time buyer sector, the prospect of owning your own home remains an appealing option for those that can afford it, with the alternative being an extremely frenzied rental market, where rents are at record levels.”