Soaring interest rates have slammed the brakes on the UK housing market as new data showed asking prices are on the slide.
Property website Rightmove flagged that the average asking price from new sellers dipped by £82 this month to £372,812.
The company said it was the first time in six years that prices had fallen in June and showed the market had entered its ‘summer slowdown’ period earlier than usual.
‘There have been some significant increases in fixed mortgage interest rates over the last few weeks, piling pressure on to very stretched budgets,’ Rightmove said.
The firm added that higher monthly mortgage repayments may have convinced many to pause home-buying plans.
On the slide: Property website Rightmove flagged that the average asking price from new sellers dipped by £82 this month to £372,812
With interest rates expected to potentially hit 6 per cent by the end of 2023, Rightmove predicts house prices will continue to fall by 2 per cent overall by December.
With the forecasts that interest rates will keep rising, Rightmove’s director of property science Tim Bannister predicted the market was ‘likely to feel very frenetic’ for those taking out mortgages as they tried to ‘quickly lock in the best rate they can find’.
While he said higher mortgage rates had had a ‘limited’ impact on demand so far, ‘more twists and turns’ were expected across the rest of the year as the market faced ‘stubbornly high inflation figures’ as well as surprisingly large increases in wages.
‘Ironically, strong wage inflation rather than the mini-Budget is now the main brake on the housing market,’ said Tom Bill, head of UK residential research at estate agency Knight Frank.
He added: ‘Those buying, selling or re-mortgaging will hope the Bank of England isn’t faced with a second ugly underlying inflation reading on Wednesday.’
The grim outlook for the property market came as the Bank of England is expected to sanction another base rate increase this week to 4.75 per cent – its 13th hike in a row. Chancellor Jeremy Hunt believes the Bank has ‘no alternative’ but to lift rates.
But the crisis in mortgage markets, with many homeowners facing huge hikes when their fixed-rate deals expire, will add to pressure in other areas such as food costs which have strained budgets.
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