Landlords: Avoid Overpricing Homes This Autumn

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The housing market is experiencing a notable recovery, yet it remains highly sensitive to pricing decisions. As autumn approaches, sellers are advised to be cautious with their asking prices to avoid potential setbacks. Even though the market shows signs of improvement, the current environment demands careful consideration when setting prices.

Tim Bannister, Director of Property Science at Rightmove, notes that the average time for a property to find a buyer has increased to 60 days. This duration is three days longer than the same period last year, despite generally better market conditions. The extended time frame reflects a shift in buyer behaviour, with prospective buyers taking more time to evaluate their options and make informed decisions. This trend highlights the need for sellers to price their properties competitively to attract serious buyers.

The market is currently divided into two distinct segments. Homes that are well-presented and priced accurately are likely to generate interest from buyers and sell relatively quickly. On the other hand, properties that are overpriced or poorly maintained may struggle to attract buyers, resulting in a prolonged time on the market. This bifurcation underscores the importance of setting a realistic asking price and ensuring the property is in good condition to appeal to potential buyers.

Additionally, the recent decline in mortgage rates has been a positive development for the market, improving buyer sentiment. However, mortgage rates remain higher than in recent years, which continues to influence buyer behaviour. Prospective buyers are still feeling the impact of elevated rates, which can affect their willingness to commit to a purchase.

While the housing market is on the mend, sellers must navigate it with care. Accurate pricing and effective property presentation are crucial for success in a market that remains price-sensitive. Sellers should be prepared for a market that demands strategic pricing and attention to detail to achieve the best outcomes.

Rightmove’s weekly mortgage tracker indicates that the average five-year fixed-rate mortgage now stands at 4.67%. This figure, while a reduction from the peak of 6.11% seen in July 2023, remains nearly double the 2.34% rate recorded three years ago. This earlier rate was in place before the Bank Rate started its series of 14 consecutive increases. The current mortgage rate reflects a significant shift in the cost of borrowing, and while some buyers are moving forward with purchases, others are opting to wait. Many are holding out for further decreases in mortgage rates and improvements in overall affordability.

Despite these challenges, the housing market continues to see activity. The latest data from Rightmove’s asking price index shows a monthly rise of 0.8%, which equates to an increase of £2,974, pushing the average property price to £370,759. Historically, September is a month when property prices tend to increase, and this year’s rise is double the long-term average. The growth in asking prices is indicative of the heightened market activity and reflects the current demand for homes.

The increased asking prices are partly driven by the recent uptick in market activity, with more buyers entering the market as they seek to capitalise on the current conditions. This uptick in demand appears to be supporting higher property prices despite the ongoing challenges related to mortgage rates. Sellers who price their homes accurately are likely to attract interest more quickly, whereas those who set their prices too high may find their properties stagnating on the market.

The property market remains dynamic, with a clear distinction between those who are ready to buy now and those who are waiting for better financial conditions. The persistence of high mortgage rates, combined with the ongoing affordability issues, means that both buyers and sellers need to navigate a market that is in transition. The market’s response to these factors will be crucial in shaping future trends in property prices and buyer behaviour.

The number of sales agreed upon has increased by 27% compared to the same time last year, marking a notable rebound from the quieter market conditions of the previous year. This surge in activity reflects the release of pent-up buyer demand as the market picks up pace.

Rightmove’s Tim Bannister notes that the autumn market has begun with renewed energy, driven by a significant uptick in activity from both buyers and sellers. This resurgence follows a better-than-expected summer market and is supported by the stability provided by a new government and the first Bank Rate cut in four years. These factors have created a window of opportunity for people looking to move, although Bannister points out that this period of heightened activity might be influenced by pent-up demand from those who had delayed their plans.

Bannister also warns that despite the current surge, there are uncertainties ahead. Key factors to watch include whether the Bank of England will implement a second consecutive rate cut in the near future and how the upcoming Autumn Statement might impact different segments of the market. Real-time data from Rightmove suggests that some market segments are already responding to anticipated changes, such as a potential increase in capital gains tax. This is evidenced by a high number of former rental properties being listed for sale, indicating that more landlords might be choosing to exit the market.

While the market shows a strong rebound in activity, it remains susceptible to future developments and changes in economic policy.