According to a recent BBC article referring to the property website Rightmove, house prices have fallen for the first time this year.
The website, which covers the whole UK, has suggested that the average price of property coming to market in August fell £1,076, to £337,371. A 0.3% drop may not seem very significant, but a drop is still a drop.
At Continuum, we are looking at what is behind the figures and why there is no need to panic.
But prices may not be falling at all
Although there may have been some falls in the last month, the overall trend can still be seen as upwards, at least if the figures for the whole year are looked at. UK property prices rose by 13.2% in the year to the end of June, the Office for National Statistics (ONS) said – the fastest rise for 17 years. Prices were typically £31,000 higher than at the same time last year.
These figures are complicated by the fact that rises were not equally distributed across the country. A high proportion of the overall increase was driven by a boom in the traditionally low-priced areas, such as the North West and North East of England, as well as Wales, Yorkshire and the Humber.
Some house prices, such as those in the high cost areas of central London may have eased, although their impact on the overall statistics are small.
So why has a fall been reported?
A fall of some kind had been predicted by market observers with the winding down of the stamp duty holiday.
Many of those who were already a fair way up the housing ladder had been taking full advantage of the stamp duty holiday to make substantial savings on a move to a bigger home. Full stamp duty could add £30,000 to an £800,000 home. This was halved when the stamp duty holiday was at its most generous.
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This seems to have led to an increase in demand and prices for larger homes as buyers were prepared to pay a little more to vendors if it meant they could give much less to the taxman.
Now, with the end of the stamp duty holiday in sight, the distortion of the top end of the market is easing off.
The heat may be going out of the market for larger homes, but prices across the rest of the market seem to be unaffected, even if the frantic rush to buy caused by the stamp duty holiday seems to have abated.
Rightmove figures suggest a 0.8% drop in the four bedroom-plus sector, but new record price highs in the two bedroom sector, up by 0.6%.
What else is affecting the market?
There are two other important factors affecting the housing market at present. Summer holiday season normally leads to a slowdown in August, with fewer properties coming onto the market, although buyers are still keen to buy.
The other change may have a more lasting impact. Working from home is becoming mainstream for many people and the trend looks set to continue. It means that living in a larger home is more desirable, but with the decline of the daily commute, it allows that home to be further away from the traditional property centres.
Rightmove’s experts predict that more properties will come on the market when owners have more clarity over their employers’ long-term balance of home and office working.
What does this mean for you?
If you are in a house that you like, you can probably sit back and continue to enjoy an appreciating asset. If your home is outside London, the race for space works in your favour, because buyers’ money will go further outside the capital, inevitably pushing up prices.
If you are looking for a move, you might want to make it sooner rather than later.
If you are considering your property plans for a home or an investment, contact us to arrange an appointment with a Continuum mortgage expert.
Of course, at Continuum we are ready to help you find the mortgage you need whatever happens to the housing market.
We are independent, which means we can look at the offerings of all the mortgage lenders. Not only can we help you identify the hidden costs and see which really are the best deals for you, we can introduce you to deals that are only available to broker services like ours.
Call us to see how much we can save you on your next home.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable mortgage product, you should seek independent financial advice before embarking on any course of action.
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