The UK property market has seen a significant drop in house prices over the summer months, with average asking prices falling by £11,000. This decline, following a trend typically seen in August, highlights the pressures facing sellers as market conditions shift. As more properties come to market, buyers are gaining leverage in negotiations.
A Summer Slowdown and Its Impact on Prices
According to Rightmove, average house prices in the UK fell by 1.3% in August, dropping to £368,740. This seasonal dip, which is common for the month of August, has been amplified by larger-than-usual price reductions in June and July. Over the past three months, the price of the typical home has decreased by almost £11,000. While these fluctuations are often seen during summer lulls, the magnitude of this drop signals deeper market adjustments.
Increased housing inventory is contributing to this cooling effect. The number of homes available for sale is at a decade-high, up by 10% from the previous year. This surge in listings is putting pressure on sellers to reduce asking prices in order to remain competitive. With more options available to buyers, the market is becoming more balanced, making it easier for prospective homeowners to negotiate.
Growing Supply Eases Affordability
The influx of homes onto the market is a key factor influencing the drop in prices. According to Rightmove, over a third of properties listed have seen price reductions since their initial listing. This increase in available inventory has provided much-needed relief to buyers, particularly as borrowing costs begin to fall. The number of homes sold in July was also the largest seen since the post-Covid recovery in 2020, reflecting an uptick in activity despite the usual summer slowdown.
Buyers are benefiting from a slight decrease in borrowing costs after the Bank of England’s recent interest rate cuts. While the rate cuts have made mortgages more affordable, experts warn that there is little room for further reductions. Matt Smith, a mortgages expert at Rightmove, noted that while lenders have adjusted their rates to stay competitive, there are few signs of significant future reductions in borrowing costs.
Sellers Adjust to New Market Dynamics
The combination of increased inventory and rising affordability is reshaping the dynamics of the housing market. Sellers are now competing for attention, which has made tempting price reductions essential to secure a sale. Colleen Babcock, a property expert at Rightmove, stressed that “buyers have the upper hand in this high supply market,” and that setting the right price is crucial for closing deals.
While the year-on-year price growth of just 0.3% signals modest growth, these shifts are indicative of a broader market recalibration. As the market adjusts to higher supply and more favourable borrowing conditions, prospective buyers are in a stronger position than they have been in recent months.
