After five years of remarkable growth in house prices reported by Leicester-based estate agents, both national and regional data are beginning to show signs of change.
According to Rightmove’s monthly house price index, the average price of a property coming to market has fallen by 1.2 per cent (£4,500) to a current average of £373,709. The Leicester market has remained relatively stable at £281,000 at the same time.
Whilst summer dips are the norm owing to the summer weather, particularly during a season that has seen more heatwaves than are common in the UK, this is the largest ever recorded by Rightmove.
There are several reasons for this, but a slower housing market does not seem to be the case based on other house price data.
Typically, lower house prices imply motivated sellers willing to drop significantly to find a buyer, but what is more likely is that there is a slow correction of the housing market following years of unprecedented surging of house prices and very low supply relative to demand.
Property sales are increasing year after year, highlighting that demand is still strong, and a mix of lower mortgage rates, average wage increases, and lower inflation relative to its particularly chaotic recent history has significantly increased buyer affordability.
There was also a cliff-edge where temporary stamp duty cuts ended, which meant that a lot of sellers were motivated to complete sales more quickly, but this has only seemed to lead to an increase in available houses relative to the number of buyers.
As well as this, whilst the fall is significant statistically, house prices are still quite high and are likely to remain resilient, whilst affordability is likely to improve thanks to predicted Bank Rate cuts, the consequential cuts to mortgage rates and a potential loosening of affordability criteria that priced many people out of the market.
Finally, an increase in stamp duty on property assets and second homes has also had an effect, suggesting that the price drop could potentially be a sign of a healthy but changing market.
