Smallest October increase to asking prices in 15 years

The housing market was quieter than usual over the summer months this year, as many people put their home-moving plans on hold during the summer holiday period, and mortgage rates remained high. And although we’ve seen mortgage rates edge down slowly since the end of July, they’re still a lot higher compared to the ultra-low levels of recent years.

Average asking prices usually rise at this time of year, as the number of home moves start to pick up again. This month, prices have edged up by 0.5% to £368,231. This is the smallest increase in October since 2008, and significantly below the average increase of 1.4% usually seen at this time of year.

In a market that estate agents are describing as the most price-sensitive ever, a more subdued seasonal rise in prices shows that some new home-sellers are lowering their asking price expectations.

Our property expert Tim Bannister says: “Some sellers are pricing more competitively, but estate agents are reporting that others still need to adjust their expectations on the price they’re likely to achieve in this lower-activity market, where six in ten homes are now selling. In the busy post-pandemic market, we were seeing eight in ten sold.”

You can read our full House Price Index report for October here

What does this mean if you’re thinking of selling your home?

If you’re looking to put your home on the market soon, estate agents are reporting that there are motivated buyers out there. But it’s important to price right the first time, to avoid the need for a reduction later.

The number of home sales agreed are 17% below this time last year, suggesting that home-sellers who haven’t adjusted their pandemic-market price expectations are finding that their homes aren’t attracting buyers.

However, the number of buyers enquiring to each available home for sale is 8% higher than the more normal market of 2019, showing that home-movers are still searching for the right home at the right price. And sellers who price competitively stand out.

Tim says: “Buyers are likely to be on the look-out for homes that they feel represent excellent value. If similar nearby properties for sale appear overpriced, home-sellers have an opportunity to stand out from the crowd and attract immediate interest, which increases the likelihood of finding a buyer.”

Attract home-buyer interest from day one

Our data shows that a property is 60% more likely to find a buyer if it attracts interest on the first day it’s listed, when compared to homes that don’t receive any enquiries until two weeks after being listed.

“Estate agents advise that sellers need to capture a buyer’s attention with a competitive price from the first day a home is listed. Our analysis shows that starting too high and reducing later seriously damages the chances of a sale,” adds Tim.

Ben Hudson, Managing Director at Hudson Moody in York, says that if home-sellers price right, there are buyers out there.

“Being too optimistic with the asking price causes a double-whammy for sellers – not only do they inevitably have to reduce the price of their home anyway, but they often put off potential buyers with too high an initial asking price and then struggle to recapture this attention when it’s reduced.

“Sellers who price realistically or even a little modestly, often find they are met with more than one buyer who is attracted by the good-value pricing, and then suddenly they have competition to buy the property which typically results in a higher agreed price,” he says.

What’s happening with mortgage rates?

Mortgage rates continue to trend in the right direction and have now dropped for 11 consecutive weeks, with buyer affordability gradually improving compared to this time a year ago.

Those with a larger deposit have seen the biggest benefit from recent rate drops. However, for those with a smaller deposit, typically those further down the housing ladder, rates are still not dropping as quickly.

You can check what the current average UK mortgage rates are here

Tim says: “The mortgage market is much more stable right now compared to three months ago, giving movers a little more assurance over the rate they’re likely to be offered, and therefore what they are likely to be able to afford.”

“Those looking to secure a new home for the new year should apply for a Mortgage in Principle to work out what they could afford and ask local estate agents what’s happening in their local housing market,” he adds.

Apply for a Mortgage in Principle to find out how much you could borrow.

READ MORE: The 10 most in-demand features for buyers

The header image of this article is provided courtesy of Grantley, Godalming