Asking values for houses fell for the first time this year, as freshly gathered data shows a potential cooling period in the housing market.
According to property comparison website, Rightmove, average market valuations for houses fell by 0.8%, or £2 116, to £270 159 in July. This marked the first monthly, price drop since the end of 2013 and contrasted with a 0.3% increase in July.
This fall in asking prices was mirrored across the UK, including the notoriously affluent south-east and London. The only areas which showed a rise in price were the Northwest, West Midlands and East Anglia.
Lower asking prices in July meant the annual growth of rate decreased to 6.5% from 7.7%. This can be seen as the latest in a multitude of factors which suggest that the over-heated housing market is finally dampening. Mortgage approvals fell for a fourth, consecutive month in May, in no small part due to measures enacted in Aprilís Mortgage Market Review. This theme of consumer wariness was given further weight by comments made by the Royal Institution of Chartered Surveyors, who implied that due to the tightening of lending rules and the threat of a housing bubble, the market was waning.
Miles Shipside, director at Rightmove, explained that a mere, annual summer lull could account for the price drop, but recognised that stricter mortgage rules and apprehension borne from a potential interest rate rise ought not to be discredited for their part in the cooling.
He said: “A price fall in July is not unexpected as prospective buyers turn their attention to the summer holidays, not to mention the added distraction of an engaging World Cup.
“Buyer confidence may also have taken a knock with suggestions that mortgages are becoming harder to get and repayments may get more costly sooner than originally anticipated, should the rumours of an interest rate rise before the next election come true.”
Notwithstanding Julyís drop, Rightmove forecasts average asking prices to rise by up to 8% in 2014, which is at the further end of its earlier projection of a 6-8% increase. As justification for the steady house price increase across the remainder of the year, the property website identified a lack of supply in popular residential areas in and around London, a blow up in the number of houses purchased in northern cities such as Manchester, Leeds and Liverpool, and a swelling of financially sound third-time buyers willing to invest.
The average time needed to sell a property fell to 65 days in the second quarter of the year, 10 days less than the same period needed a year before.
Miles Shipside said: “Market conditions still compare favourably with this time last year, with growth in both the economy and employment, plus a comparative thaw in mortgage availability. The ‘year to move’ window looks likely to be open for a while longer yet, though we expect market activity will slow down in the run-up to the election in May next year.
A key factor in the dramatic rising of house prices in recent times has been a lack of fresh properties, in popular areas, coming onto the market. Rightmove said despite supply being 10% higher in 2014 than the same period last year, Britain faced a seemingly insurmountable challenge of combating the heavy levels of demand in low-supply, fashionable areas, such as London and its border regions. Demand, across the UK, was up 27% to roughly 3.7m enquiries a month.