A Changing UK Property Market
The UK property market is changing again, with new figures showing that asking prices have fallen during August as sellers face greater competition for buyers.
According to figures reported by Rightmove and covered by The Guardian, the average asking price of a newly listed property fell by 2% in August.
That represents a reduction of around £7,360, bringing the average asking price of a newly listed property to approximately £364,999.
It is reported to be the largest August decline in asking prices since 2018.
Does a Fall in Asking Prices Mean Homes Are Suddenly Cheaper?
Not necessarily.
The purchase price is only one part of the overall cost of buying a home. Mortgage interest rates, your deposit, mortgage term, income and personal financial circumstances can all have a major effect on affordability.
Why Are Asking Prices Falling?
One important factor is the amount of property currently available to prospective buyers.
When buyers have more homes to choose from, sellers face greater competition.
A seller who needs to move may therefore have to price their home more realistically in order to attract interest.
That can create a very different environment from a rapidly rising market where buyers may feel pressured to make quick decisions or compete heavily with other purchasers.
For prepared buyers, greater choice can potentially create more room to compare properties carefully and negotiate.
Buyers May Have More Negotiating Power
A greater supply of homes can potentially strengthen the position of buyers.
If several comparable properties are available in the same area, purchasers may have more opportunity to compare price, condition, location and value before deciding whether to make an offer.
Sellers who have had a property on the market for some time may also become more open to negotiation.
However, buyers should be careful not to look at the headline asking price alone.
Before deciding what represents an affordable property, it is important to understand the mortgage that may be available to you and the monthly repayments involved.
For First-Time Buyers
A market with greater property choice and more price-conscious sellers could provide opportunities for first-time buyers.
But before beginning serious negotiations, it can be useful to understand how much you may be able to borrow and what deposit you will need.
Having an informed mortgage budget can help you focus your search on properties that are realistically affordable.
For Home Movers
Falling asking prices can affect both sides of a move.
You may be able to negotiate more effectively on the property you want to purchase, but you also need to consider the realistic selling price of your existing home.
Understanding the mortgage available for your onward purchase can therefore be an important part of planning the move.
Mortgage Rates Still Matter
Although asking prices have softened, borrowing costs remain an important part of the affordability calculation.
The article highlights how mortgage rates have been moving, with the average cost of a two-year fixed mortgage reported at around 5.09%, compared with approximately 4.95% a month earlier.
This demonstrates why a reduction in a property's asking price does not automatically mean the monthly cost of buying that property has fallen.
Even relatively small changes in mortgage rates can affect monthly repayments, especially on larger mortgage balances.
Property Price and Mortgage Affordability Are Not the Same Thing
A home may be advertised for less than it was previously, but the mortgage required to purchase it could still cost more each month if borrowing rates have increased.
That is why it is useful to review the full financial picture rather than relying on house-price headlines alone.
What Should First-Time Buyers Consider?
For first-time buyers, a changing market could provide a useful opportunity to begin exploring what is affordable.
The average asking price for a typical first-time buyer property was reported at around £225,525.
Of course, national averages only provide a broad indication. Property prices can vary significantly between regions, towns, streets and even different parts of the same postcode.
Before making an offer, first-time buyers may benefit from understanding:
- How much they may be able to borrow
- The deposit they may need
- Likely monthly mortgage repayments
- Different mortgage term options
- Relevant lender affordability criteria
- Potential fixed-rate mortgage options
- The role of a Decision in Principle
- Other costs associated with buying a home
Having this information before you become emotionally invested in a particular property can help you search with a more realistic understanding of your budget.
What About Existing Homeowners?
The latest property figures are not only relevant to people who are currently buying.
Existing homeowners approaching the end of a fixed-rate mortgage may also want to pay close attention to what is happening in the mortgage market.
When a fixed-rate mortgage comes to an end, borrowers may move onto their lender's Standard Variable Rate unless another arrangement is put in place.
Depending on the lender and individual circumstances, this can mean a significant change in monthly repayments.
Reviewing your options before the current deal ends can provide more time to consider whether a new product with your existing lender or a remortgage with another lender may be appropriate.
Why Reviewing Your Mortgage Early Can Help
Mortgage decisions do not always need to be left until the final few weeks of a fixed-rate deal.
Beginning the conversation earlier can provide time to understand the available options, consider changes in your circumstances and look at how different mortgage products could affect your monthly expenditure.
Your circumstances may also have changed since you originally took out your mortgage.
For example, your income may have changed, your outstanding mortgage balance may be lower, the value of your property may have changed or you may now have different financial commitments.
All of these factors can potentially influence the mortgage options available.
National Headlines Do Not Tell the Whole Story
It is also important to remember that there is no single UK property market.
House-price trends can vary considerably between different areas of the country.
Some parts of the market may experience falling prices while other locations continue to see stronger demand and annual price growth.
The type of property matters too.
The market for first-time buyer flats can behave differently from the market for larger family houses, for example.
This means that statements such as "UK house prices are falling" should always be considered alongside what is actually happening in the area where you want to buy or sell.
What Does This Mean for Buyers in Sutton, Carshalton and South London?
For anyone looking locally, national figures can provide useful context, but your individual property search will depend on local supply, demand and affordability.
Someone looking for a family home in Sutton may have very different priorities from somebody purchasing a flat in Norbury, Streatham or Croydon.
Buyers may also want to compare neighbouring locations to understand what their budget could purchase in each area.
- Sutton
- Carshalton
- Wallington
- Cheam
- Norbury
- Streatham
- Mitcham
- Thornton Heath
- Croydon
- Surrounding South London areas
Understanding your mortgage position before arranging large numbers of viewings can help you compare areas with a much clearer idea of what is financially realistic.
Why Speak to a Mortgage Broker Before Making an Offer?
Many buyers begin by searching property websites and only start thinking seriously about the mortgage once they find a home they like.
In many cases, reversing that process can be useful.
Your mortgage affordability does not depend purely on a simple multiple of your salary.
Lenders can take account of factors such as:
- Your income
- Your deposit
- Existing loans and credit commitments
- Regular expenditure
- Employment status
- Credit history
- The mortgage term
- Your age and wider circumstances
- The individual lender's affordability rules
Different lenders can assess the same borrower differently, which is one reason professional mortgage advice can be valuable.
What Can Gordon Blair Financial Services Help With?
At Gordon Blair Financial Services, we help buyers and homeowners understand their mortgage options based on their own circumstances rather than relying purely on national headlines or online calculators.
We can help with:
- First-time buyer mortgages
- Home mover mortgages
- Remortgage options
- Understanding borrowing potential
- Reviewing deposit requirements
- Mortgage repayment discussions
- Relevant lender criteria
- Decision in Principle guidance
Our aim is to help you understand what may be realistically achievable before you make an important property or mortgage decision.
Preparation Matters in a Changing Market
Falling asking prices can attract attention, but they are only one part of the property and mortgage picture.
For some buyers, greater property choice may create an opportunity to negotiate.
For others, mortgage rates and affordability may remain the more important consideration.
Existing homeowners may meanwhile be thinking about what happens when their current mortgage deal comes to an end.
Whatever your position, having a clear understanding of your mortgage options can help you make a more informed decision.
Thinking About Buying, Moving or Remortgaging?
Whether you are buying your first home, moving to your next property or approaching the end of your current mortgage deal, speak to Gordon Blair Financial Services about the mortgage options that may be available to you.
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