The average asking price of a newly-listed home coming to the market for sale has fallen by 2.0% this month to £364,999, a much larger than usual August drop, the latest Rightmove figures show.
Prices usually fall in August, but this is a larger decline than the ten-year average of -1.3%, and the largest since 2018.
The number of available homes for sale is at a 12-year high for this time of year. When combined with the traditionally quiet summer holiday period, this has led to lower price expectations from sellers who have decided to come to market, despite the lower volume of active buyers.
Encouragingly, it appears that these sellers are entering the market at competitive prices, giving themselves a higher probability of selling. The average asking price for a home is now 1% lower than at this time last year, the largest annual drop in prices since December 2023.
The data also shows a divided regional picture for property price growth. The northern regions of England have actually seen average new seller asking prices increase by 1.5% versus last year, while the southern regions of England have seen prices drop by 1.8%. London has seen the biggest yearly fall in prices of any part of Great Britain at -3.1%. Conversely, prices in the North West are up the most, by 1.9% annually. Average prices are also higher in Scotland compared to last year, and only marginally down in the Midlands and Wales.
Looking more closely at the capital, the number of available homes for sale in London is the highest it’s been in sixteen years, outpacing the national trend, and meaning even more competition for sellers to find buyers. London is also facing a unique set of circumstances beyond just supply and demand trends which is creating challenges for some movers. In terms of affordability, despite wage growth out-performing property price growth in recent years, an average home in London still costs around 17 times the national average annual wage. London is also priced 38% higher than the second-highest priced region the South East. While high prices in London are nothing new, when combined with elevated mortgage rates, it’s a reminder of just how affordability-stretched London buyers are.
Although buying activity is still around 10% below last year’s level, Rightmove has recorded a mini bounce of 5% in buyer demand since Andy Burnham came to power on the 20th July. Comparatively, last summer saw a drop of 2% over the same period. The new Prime Minster has ruled out property tax changes in October’s Budget, meaning buyers have fewer reasons to wait around and see what happens.
Rightmove says that after a subdued summer, where several heatwaves and the World Cup provided added distractions, the market could see a busier than usual Autumn. However, elevated mortgage rates do continue to stretch buyers. The average two-year fixed rate is now 5.09%, up from 4.92% last month. Although, there are signs that there is room for some downwards movement in rates over the coming weeks.
Amid the changing picture for mortgage rates, alongside geopolitical uncertainty and the new Chancellor’s first Budget in October, Rightmove has downgraded its price forecast for 2026 from 2% to a change of between 0 and -2% in average new seller asking prices over the year as a whole.
Colleen Babcock, property expert at Rightmove, commented: “This month's larger-than-usual August price drop is a sign that many sellers are recognising the reality of the market and pricing much more competitively from day one. Buyers have the widest choice of homes for sale at this time of year in more than a decade, so standing out on price for the right reasons is hugely important. While no seller likes to come to market lower than they might have hoped, Rightmove analysis shows that those who price realistically are statistically proven to be giving themselves the strongest chance of finding a buyer and successfully completing a move. One tactic some sellers are using when considering lower offers on their home, is to also make a lower offer themselves on their onwards purchase, to see if they can make up the difference.
“National average prices are increasingly masking very different local market conditions. While asking prices across both northern England and Scotland continue to edge upwards, southern England is moving in the opposite direction, with London seeing the biggest annual price fall. Alongside an abundance of choice, the capital faces greater affordability challenges for buyers, through both high price to income ratios and higher taxation. The mini Burnham bounce and some renewed general optimism have brought a degree of improvement to the market as a whole in recent weeks. Whether that develops into a more sustained recovery will likely depend on confidence, mortgage rates and the new Chancellor’s first Budget this Autumn.”
