© Reuters. FILE PHOTO: Property estate agent sales and letting signs are seen in south London, Britain, September 23, 2021. REUTERS/Hannah McKay
By Suban Abdulla
LONDON (Reuters) – Asking prices for British residential properties are dropping and there are signs that the fallout from the “mini-budget” bond market rout is weighing on first-time buyers, property website Rightmove (OTC:) said on Monday.
Asking prices for homes dropped 1.1%, or by 4,159 pounds ($4,886.41) month-on-month in the Oct. 9 – Nov. 5 period, after a 0.9% rise over the previous month, Rightmove said.
The decline – despite the “weight of financial uncertainty” – was in line with the average fall recorded in November during the pre-pandemic years of 2015-2019, it said.
But Rightmove said former prime minister Liz Truss’s growth plan, which triggered a steep rise in borrowing costs when it was announced in September, accelerated Britain’s property market slowdown.
Average two- and five-year fixed rate mortgages surpassed 6% in October for the first time since the global financial crash in 2008, according to data from website Moneyfacts.
Rates have since eased back after the announcement of Rishi Sunak as prime minister calmed financial markets.
“We’re now in another state of limbo as we wait for any surprises or help in Jeremy Hunt’s Autumn Statement on Thursday,” Tim Bannister, director of property science at Rightmove said.
Finance minister Hunt is expected to announce spending cuts and tax increases to repair Britain’s public finances and restore its credibility among investors.
“The frenzied market of the past two years has turned into a more normal market more abruptly and less smoothly than we were expecting,” Bannister said.
First-time buyer homes continued to be the most affected category, with demand down by 26% compared with a year earlier but still up 7% on the same period in 2019.
“The first-time buyer sector saw the biggest increase in activity during the market frenzy of the past two years, but is now facing the biggest challenges after the sudden jump in mortgage interest rates,” Rightmove said.
In annual terms, property prices were up 7.2% in November, slowing from a rise of 7.8% the month before.($1 = 0.8511 pounds)
The survey echoed other recent signs of a weakening of Britain’s housing market including a first fall in two years in the property price measure of the Royal Institution of Chartered Surveyors.