Asking prices for homes in Great Britain have slipped into annual decline for the first time since January 2024, driven by weaker conditions in London and the south of England, according to the latest data from Rightmove.
The average new seller asking price rose by 0.4% in September, equivalent to £1,517, taking the typical asking price to £370,257. However, despite this modest monthly increase, average prices are now 0.1% lower than a year ago.
The fall follows a summer of competitive pricing from sellers seeking to attract buyers in a market characterised by high stock levels.
The south of England is bearing the brunt of the decline. In the South West, asking prices are 1.3% lower than a year ago, while London and the wider south are underperforming the rest of the country. By contrast, the North West has recorded a 3.2% annual increase. The West Midlands is the only northern region to see a yearly fall, at 0.1%.
TAKING STOCK
The number of homes for sale in the south of England is up 9% year-on-year, compared with a 2% increase across the rest of Great Britain. Homes in the south also take an average of five days longer to secure a buyer than those in northern regions and Wales. Scotland remains the fastest-moving market.
Despite regional headwinds, overall market activity has strengthened. The number of sales agreed across Great Britain is 4% higher than at this time last year, with activity outside London and the south up by 5%. Even in the south, where conditions are weaker, sales volumes have risen 3% year-on-year, suggesting buyers remain engaged when pricing is competitive.
BUDGET SPECULATION
Speculation over potential property tax changes in the Autumn Budget on 26 November risks adding pressure to southern markets.
Any reform of stamp duty on homes above £500,000 would disproportionately impact London, where 59% of sales exceed that threshold, compared with a national average of 22% and just 8% in the North East.
Proposals for a mansion tax would have a similar effect: 11% of homes in London are valued at £1.5m or more, compared with just 2% outside the capital.
Mortgage rates continue to play an important role in affordability. Since the Bank of England’s first rate cut in August 2024, the average 2-year fixed mortgage rate has fallen from 5.03% to 4.52%, trimming around £100 from the monthly cost of servicing a mortgage on an average-priced home with a 20% deposit.
With static prices, rising wages and more competitive mortgage products, affordability is improving for many buyers. However, continued uncertainty over property taxation risks widening the north-south divide in the months ahead.
IMPROVED BUYER AFFORDABILITY
Colleen Babcock, property expert at Rightmove, said: “We’d expect to see a slight uptick in new seller asking prices in September, with the traditional back to school season boosting activity heading into autumn.
“This year’s 0.4% September price rise is a little lower than the norm, which is an average of 0.6% at this time of year.
“However, prices have now dipped slightly from where they were at this time last year after a summer of competitive pricing by sellers, and it’s the south of England which is driving this small dip.
“It’s the sensible and attractive seller pricing we’ve been reporting which has been helping to drive more sales activity compared to last year. Static house prices, rising wages, and lower mortgage rates all assist buyer affordability, which has led to an increase in the number of sales agreed compared to a year ago.”
FIRST-TIME BUYERS
Matt Smith, Rightmove’s mortgage expert, added: “Mortgage rates have edged upwards over the last few weeks as global events have made mortgage financing a little more expensive.
“Inflation is also proving sticky, and as we saw in the commentary from the Bank of England at the last rate decision, there is some uncertainty from the Bank about the future road of rate cuts.
“Like in the housing market, we often see a bounce in lender activity in September after the summer holidays so we can expect lenders to remain as competitive as possible to secure business.
“The rhetoric around mortgages continues to be about how lenders can unlock greater affordability by allowing people to responsibly borrow more, which is encouraging for the market, particularly first-time buyers.”
STAMP DUTY REFORM
Tomer Aboody, director of specialist lender MT Finance, says: “The affordability matrix still shows that first-time buyers are struggling to get on the ladder, with the average property price still higher than the average couple’s 4.5 times income multiple.
“Surely this has to change so that first-time buyers can afford to purchase their first home?
“Stamp duty reform is urgently needed to allow more homes to come to the market, so that downsizers are encouraged to sell and enabling families to buy. This will also free up more affordable flats and smaller houses for first-time buyers.
“The property cycle is a huge focal point of the economy in the UK, and any government discouraging this, or not actively trying to bolster this, will see the economy falter.”
