Property asking prices fall more than £5,000 on average as Budget jitters hit the market

Property asking prices fell by more than £5,000 on average this month, according to Rightmove.

The typical newly-listed home fell in price by 1.4 per cent in November, an average of £5,366, the property website revealed.

The fall represents a bigger drop than normal at this time of year, which Rightmove attributed to pre- and post-Budget jitters.

It said the average home now goes up for sale with an asking price of £366,592.

Despite the fall in asking prices this month, the property market is far busier than last year, the property website said. 

The number of sales being agreed is 26 per cent ahead of the quieter market at this time in 2023, it claimed. 

Interest from buyers is currently running 23 per cent ahead of last year while the number of new sellers putting their home on the market is up 6 per cent on the same period a year ago.

Asking prices to rise next year

The average asking price will rise by 4 per cent next year, according to Rightmove. This is the most optimistic prediction since 2021. 

Its property experts think lower mortgage rates will release some of the pent-up housing demand and put modest upwards pressure on prices.

They also expect a surge in the number of completed sales in March next year as buyers seek to get in ahead of the stamp duty rise at the end of that month. 

Tim Bannister, one of Rightmove’s property experts said: ‘There’s been a lot of news to digest for home movers over the last few weeks and it appears that the market may still be chewing it over. 

‘We had been seeing a drop-off in buyer demand, both in the lead-up to the Budget and in its immediate aftermath, as it was confirmed that there will be an increase to stamp-duty charges for most home-movers and second home buyers, and some first-time buyers. 

‘However, a second bank rate cut and a boost of optimism regarding 2025 appear to have reversed this trend at least temporarily. 

‘This sets us up for what we predict will be a stronger 2025 in both prices and number of homes sold, particularly if mortgage rates fall by enough to significantly improve affordability for more of the mass-market.’

However, Rightmove also says the market remains price-sensitive, and seller competition is at its highest level for a decade. 

More homes on the market means buyers can afford to be more picky and potentially haggle on prices.

It is also hard to judge the impact that Rachel Reeves’ new stamp duty surcharge on second home purchases will have on property prices.

These buyers already faced a 3 per cent surcharge above and beyond what those purchasing a property to live in currently pay. 

However, from 30 October that went up to 5 per cent, adding thousands of pounds to the cost of buy-to-let and second home purchases.

Fewer buyers combined with a glut of homes on the market could be a recipe for prices falling, rather than rising. 

What will happen to mortgage rates? 

Fixed mortgage rates have also been rising in recent weeks despite the Bank of England cutting interest rates earlier this month from 5 per cent to 4.75 per cent. 

Market expectations about how quickly, and how low, interest rates will fall in future have shifted of late – and this is having a direct impact on fixed mortgage rates. 

The Bank of England base rate is still expected to fall over time, but markets are now questioning if the pace will be as rapid. 

Most estate agents are optimistic, however.

Kevin Shaw, National Sales Managing Director at Leaders Romans Group said: ‘There is some uncertainty following hikes in National Insurance and the minimum wage. 

‘There has been a lot of change in the last couple of weeks, so I think time will tell. 

‘It’s definitely an interesting time in the market but as we go into 2025 we expect market sentiment to improve further.’

Alex Caddy, manager at Clarkes Estate and Letting Agency added: ‘There are still many sellers planning their moves who are out looking despite not yet having a buyer themselves. 

‘There is certainly optimism that as first-time buyer activity picks up, this will create the much-needed knock-on effect to kick-start next year.’

Estate agents are advising that buyers could bag themselves a bargain before Christmas.

‘Decisions are being made now before the buildup to Christmas, as buyers are more likely to get price flexibility from sellers now rather than in the New Year,’ said Kevin Shaw of Leaders Romans Group.

‘This presents a good opportunity to negotiate, as there will certainly be more people looking in January after the Christmas break and usual surge in enquiries on Boxing Day.’