According to the most recent report from Rightmove, the housing market proved resilient for another month with slight growth of 0.9%. However, there are specific signs that first time buyers are exiting the market as interest rates are rising and expected to rise more. The Bank of England’s Monetary Policy Committee (MPC) has increased the standard base interest rate during the last seven consecutive meetings and are forecasted to do the same at the next meeting in November. The rate hike in November could also be the largest increase seen yet this year.

The property listing website, Rightmove, reported the average price of a property coming onto the UK housing market brought a new average record of £371,158 which is a 0.9% increase. While the market appears to remain resilient, it could be as Rightmove suggested only the changes to the market taking time to filter through as some buyers rushed to buy to obtain a current interest rate before further increases.

Interest in the market from first time buyers was reported to be 21% lower in the last few weeks in comparison to data from 2021, yet still higher than the data reported on first time buyers in 2019. 

It should be noted that growth upon growth upon growth has been the norm for the past few years in the housing market as the Bank’s base rate reached an over 300 years all-time low of 0.1%. Demand was fueled by the race for space as home buyers sought pandemic friendly homes with adequate space to work, study, and lived confined during lockdowns.

Sellers are showing signs of worry that buyers could soon be less enthusiastic in the market as there were 23% more reduced prices of homes on sale compared to the 21% from the previous month. Experts are expecting further drops in asking prices for the rest of the year and this could keep buyers interested and save the market from falling by end of year. However, forecasting the market for 2023 is going to be difficult. Buyers have been less in line with expectations of experts’ responses to economic conditions such as the strong demand despite the global pandemic.

Rightmove’s director, Tim Bannister, remarked, ““What’s going to happen to house prices is understandably on the minds of many home-movers right now, especially after the market uncertainty after the government’s mini-budget. There has been no immediate effect on prices, but the trend of a slight softening in the pace of growth continues.”

The next MPC meeting is scheduled for 3 November. Should the MPC increase indeed be significantly higher than the 0.50% increases seen in the last two meetings, it could motivate a stronger demand from buyers and also from homeowners seeking remortgages.