"Further price falls beyond the usual seasonal trends that we’d expect at this time of year signal that some new sellers are continuing to act on the advice of agents to price competitively"
- Tim Bannister - Rightmove
Sellers who come to market in December often have a pressing reason to sell and need to find a buyer quickly, and therefore price more attractively to capture the attention of festivity-distracted buyers.
However, this December's fall of 1.9% (or £6,966) to £355,177 is a slightly bigger drop in newly marketed property prices than usual, with the December average over the last 20 years being -1.5%.
Rightmove suggests that this fall is partly driven by more new sellers looking to price below the competition now that the pendulum has swung towards a buyers’ market. This month’s drop means that we end the year with national average asking prices 1.1% below this time last year.
Higher mortgage rates have been a key challenge for movers this year, and affordability remains stretched. However, with improved market stability as we head into 2024, there are signs of greater activity from family movers who had put their plans on hold during the fallout from the mini-budget.
Rightmove’s Tim Bannister comments: “Further price falls beyond the usual seasonal trends that we’d expect at this time of year signal that some new sellers are continuing to act on the advice of agents to price competitively. We entered this year under a cloud of uncertainty, as the fallout from the Autumn mini-budget filtered through to lower activity levels.
"High mortgage rates which have added to already-stretched buyer affordability have been a challenge throughout 2023 and this is likely to carry into next year. However for now, there appears to be more calm and certainty heading into 2024, and the annual fall of 1.1% in asking prices highlights the market’s much-better-than-predicted resilience this year.”
Sales
The number of sales agreed in the year to date is just 13% behind the same period last year, a better-than-expected figure given that the 2022 market was much more frenetic, and three of the ten strongest months on record for buyer demand occurred in the first half of that year.
Whilst at a national level average asking prices have seen a marginal fall of 1.1% compared to last year, there is a mixed picture across Great Britain, which has thousands of hyper-local markets, highlighting the need for sellers to price in line with their local market trends.
Average new seller asking prices are higher in seven out of 11 areas across Great Britain compared to a year ago, with the North West leading the way at 1.5% higher than last year, and the South East being the worst performer at 3.7% below 2022.
Mortgage rates
Average mortgage rates have now fallen for 19 consecutive weeks, with the average 5-year fixed mortgage rate now 5.11% compared to 6.11% in July. One of the trends that we therefore expect to emerge next year is a return of more family movers who now want to trade up for more space.
With the mortgage market more settled and the expectation being that the Bank of England Base Rate has peaked, those looking to move up the ladder and take out a larger mortgage, many of whom put their plans on hold after the mini-budget to wait and see how this year played out, may now feel in a stronger position to act.
We’re seeing early signs of more activity in the family mover market, with demand in the mid-market second-stepper sector (all three and four-bed properties, excluding four-bed detached houses) up by 9% versus the post-mini-Budget period of this time last year, compared with overall demand being up by 6%. However, first-time buyers will also be needed to keep the market moving and form the bottom of chains.
Sellers still need to price more aggressively than their local competition to secure a buyer, especially those with a pressing need to sell.
While current trends suggest that the mortgage market will be more stable, interest rates are likely to remain elevated next year, continuing to put pressure on buyer affordability. Rightmove therefore predicts that national average asking prices will drop by an average of 1% in 2024.
Tim Bannister said: “With mortgage rates more settled and on a slow downward trend, potential movers who have been biding their time and waiting for calmer market conditions may decide to act in the early part of next year.
"Indeed, there’s always a big post-Christmas upturn in Rightmove traffic, with earlybird-buyers starting their search on Boxing Day. This year’s upturn will be eagerly anticipated by those who are keen to sell, especially family movers who are considering having an estate agent board put up as the Christmas tree comes down.
"Rightmove’s research and agent feedback is that the best strategy to sell in the current market is to price temptingly at the outset of marketing, rather than testing the waters with a higher price. This will hopefully avoid the need to reduce your asking price later, and capture that early-bird buyer’s interest in the New Year, whilst also avoiding the stress of drawing out the selling process and risking having the for-sale board still up at Easter.”
Josephine Ashby, Managing Partner of John Bray Estate Agents in Rock, Cornwall, adds: “2023 has been an interesting year, with very little straightforward, yet far from the negative market it might have been given the broader economy.
"Whilst there has been a lower transaction level than the previous few years and some adjustment in values, attractively priced property is selling. Very prime coastal property has held firm and sold well and sensible sellers who are realistic about guide prices are achieving positive results.
"There is less risk-taking and the fluctuation of mortgage rates has made it a bumpy road for some, but as we turn towards 2024, we are hopeful that activity will continue despite a general election. Our advice to both buyers and sellers is to be realistic with expectations, it is potentially an easier market for buyers in prime areas with more choice and less pressure.
"Vendors; get organized, take early interest seriously and above all pitch values at an attractive level from the outset.”
