Property prices have been on the up for a while now, but at last they seem to be coming back down. According to property giant, Rightmove, house prices have fallen by 2.9% during August, making it the biggest price drop ever seen in the property market.
The survey, carried out by Rightmove, found that property prices have now been down for two consecutive months this summer, with a huge 6% drop in the London property market.
While prices do generally tend to decrease over the summer months, as people are less likely to move, the decline seen this summer is the biggest they have ever recorded.
It seems that those trying to sell their home are putting their properties on the market at a “discount” price, in order to attract buyers who have been put off this year by the soaring market and rising interest rates.
In comparison to last August, there has been an 8% increase in the number of homes being put up for sale, and combined with a drop in demand, prices across the country have been brought down, bringing the UK back into a buyers’ market.
The entire UK saw a drop in property asking prices, but London was definitely hit the hardest with three consecutive months of decreasing prices, as buyers were put off by the over inflated house prices.
Miles Shipside, Director at Rightmove, said that although a price drop in August is fairly typical, this year has been steeper than they expected:
“Both buyers and sellers are becoming increasingly aware about personal finances, given that the cost of mortgages are going up and regulators are trying to bring availability down. This limits what buyers are willing or able to pay, and helps moderate sellers price expectations.”
He also said that homeowners are becoming quite accustomed to the increasing property prices and could therefore be quite shocked as falling property prices may have an effect on actual completion prices.
The Bank of England revealed last week that wage growth is continuing to lag behind the cost of living in the UK, meaning that potential buyers are now much more wary about leaping head first into the property market.
Professor Peter Spencer of the EY Item Club said:
"Very high levels of house prices that have been reached which was a sign of an asymmetric, overheated sellers' market. A more balanced market is emerging and people must be more realistic about pricing."
Rightmove have said although there has been a jump in property supply across the country, the amount of houses on the market it still “well below” where it was this time last year. In addition to an increase in houses on the market, stricter mortgage lending rules that were introduced in April 2014 have also had an effect on buyer demand.
Mark Carney, the governor of the Bank of England, warned last week that the base interest rate set by the bank’s Monetary Policy Committee could actually begin to rise earlier than the property market expects.
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