The housing market looks increasingly on a knife-edge as the traditional autumn sales season begins.
The latest major index shows that house prices fell 0.2% in August following a -0.1% decrease in July.
The average UK property price is now £298,468 compared with £299,153 in July.
On an annual basis, UK-wide prices have fallen by -0.4%, the first year-on-year decrease since November 2023.
The data comes from Lloyds Bank but its national figure reveals some larger falls, especially in southern England.
The South East saw the largest decline, with prices down -1.6% year-on-year , followed by Greater London, where prices fell -1.5%.
The South West and Eastern England both recorded annual declines of -1.2%.
in response Iain McKenzie, chief of The Guild of Property Professionals, comments: “The key question now is whether we are seeing a temporary summer pause or the start of a more sustained period of softer activity.
“Transaction volumes remain relatively healthy, while improving consumer confidence and the early signs of an autumn recovery in buyer searches suggest there is still underlying demand in the market.
“The next few months will be telling.”
Jonathan Hopper, chief executive of Garrington Property Finders, adds: “Sentiment is cautious everywhere, and deals are mostly being done by ‘need to move’ buyers rather than ‘want to move’ buyers. The more affordable price bands are the most active, as generally speaking motivation levels are higher here.
“Today’s weak data is likely to further suppress buyer activity as the prospect of further price falls won’t encourage buyers to rush to do a deal at anything other than a fair price this Autumn. The summer lull is unlikely to turn into a September surge.”
And Jeremy Leaf, former RICS residential chairman and himself owner of a London agency, sees it this way: “We are seeing a bit of a stand-off between buyers who are nervous about making offers while worried about the effects of inflation on mortgage costs and sellers who believe they have reduced as much as they can.
“Therefore, prices overall in the fewer properties which are changing hands are not only softening but sales are taking longer.
“There is more movement when sellers set realistic asking prices from the outset and appreciate after a period of marketing that even a cheeky offer is worth considering.”
The author of the index – Andrew Asaam, mortgages director at Lloyds – is concerned but says sellers are not yet panicking.
“What we’re not seeing is a rush of homeowners cutting prices. But more are choosing to sit tight, with sellers reluctant to accept offers they feel are too low, while some buyers are waiting to see how conditions develop.
“As a result, fewer homes are changing hands, with latest industry figures showing mortgage approvals now at their lowest level since the start of 2024.
“It’s also important to keep recent price movements in perspective. Average house prices remain around 25% higher than they were at the end of 2019, despite the substantial increase to interest rates seen over recent years.
“The market’s adjustment to higher borrowing costs has been gradual, with wage growth helping to offset some of the pressure on affordability. The recent modest declines in prices are best viewed in that wider context.”
This article is taken from Landlord Today