"With the housing market looking slightly more subdued compared with previous months, we may finally be seeing the anticipated slowdown in price growth."
However, this is the smallest increase since January as the pace of price rises starts to slow.
Despite five consecutive interest rate rises and the increasing cost of living, buyer demand for each available property remains very strong, being more than double (+113%) the pre-pandemic five-year May average. However, Rightmove says it is seeing signs that this is continuing to ease, with this measure down by 8% in May compared to April.
After a very strong first half of the year, Rightmove says it is likely that affordability constraints will have a greater influence on market behaviour in the months ahead, with further interest rate rises anticipated. This, alongside more choice coming onto the market for buyers and the usual seasonal variations, means that there are likely to be some month-on-month price falls during the second half of the year. Rightmove expects this to bring house price growth by the end of the year to around the 5% it originally predicted in December.
Buyers are currently being welcomed with more fresh choice, with the number of properties coming onto the market up by 7% compared to this time last year. However, this measure remains down by 11% when compared to the same time in 2019.
A conveyancing log-jam means that those who are looking to move this year and have yet to act will need to do so in the coming weeks. It is currently taking 150 days to complete a purchase on average after agreeing a sale, 50 days longer than at this time in 2019. This means that those who are hoping to complete a deal in time to enjoy next Christmas in a new home, need to come to market in the next few weeks to give themselves the best chance of finding a buyer and completing the transaction by the end of the year. There are more than 500,000 homes that are currently sold subject to contract,which is 44% higher than it was at this time in 2019, and 39% higher than the pre-pandemic five-year average.
Tim Bannister, Rightmove’s director of property, commented: “The exceptional pace of the market is easing a little, as demand gradually softens and price rises begin to slow, which is very much to be expected given the many record-breaking numbers over the past two years. When we look at the number of buyers contacting estate agents compared to 2019 or the pre-pandemic five-year average, demand is still very high compared to what was once considered normal. We’re hearing from agents that though they might have had slightly fewer enquirers for each property in recent months, they’re still seeing significant interest from multiple buyers and are achieving successful sales. Entering the second half of the year, we anticipate some further slowdown in the pace of price rises, particularly given the worsening affordability challenges that people are facing. We expect this to bring the annual rate of price growth down from the current 9.7% towards the 5% increase that Rightmove predicted at the beginning of the year.”
Tomer Aboody, director of MT Finance, commented: "With the housing market looking slightly more subdued compared with previous months, we may finally be seeing the anticipated slowdown in price growth. Several factors, such as the rising cost of living and interest rates, are behind this.
"Buyers are increasingly cautious in their bidding, not so prepared to stretch themselves and also shying away from taking on renovations or other home improvements, due to the uncertainty in terms of prices for material and labour.
"That said, the turning tide is providing an impetus for sellers who are keen to take advantage of potentially the final few months of the flurry, and sell at a record price."
Jeremy Leaf, north London estate agent and former RICS chairman, added: "Even the Rightmove survey, in common with other recent housing indices, is telling us the housing market is coming off the boil despite the average asking price of newly-listed properties reaching record territory for the fifth consecutive month.
"Rightmove’s findings have been defying reason for several months but finally affordability issues, prompted by the rising cost of living and particularly energy and interest rates, are having an impact.
"Hopefully, the change in circumstances will mean vendors set more realistic asking prices so that the level of transactions, which are important for the health of the market, can keep up as closely as possible with last year’s."
