UK house prices have declined for the first time this year as buyers begin to exit the housing market. Interest rates as well as other economic factors such as inflation have had a negative impact on budgets. Confidence in the economy has also declined making some buyers take a backseat rather than move ahead with a purchase. However, Rightmove puts blame on summer distractions rather than the current economic conditions for the decline of house prices.

The average property price fell to £365,173 in August. This was a 1.3% decline of £4,795.

As Rightmove reported, the decrease is in line with a usual summer decline in the market.

Tim Bannister, Rightmove director, remarked, “A drop in asking prices is to be expected this month as the market returns towards normal seasonal patterns after a frenzied two years, and many would-be home movers become distracted by the summer holidays”

The current average time to complete a sale in the market is approximately four and one-half months. Some of the decline is from sellers hoping to find a sale quickly to allow them to move before the holidays. Therefore, they have cut asking prices to better appeal to buyers.

The current standard base interest rate set by the Bank of England’s Monetary Policy Committee (MPC) is 1.75%. The rate has been increased during the last six consecutive MPC meetings, including the largest in years of a 0.5% increase this month.

Many lenders believe offerings will increase to 2.5% or more by the end of the year. If so, it could cut off some hopeful homebuyers as purchasing becomes unaffordable.

Lenders expect the slowdown in mortgage business will be replaced with homeowners seeking remortgages to try and escape paying more because of interest rate increases.

Rightmove forecasted UK house prices to grow by 7% over 2021 prices.

Despite the economic environment, property prices could rebound as supply drops. The level of available properties on the market is down 39% from 2019 and buyer inquiries are 20% higher than before the Covid outbreak.

The UK housing market has proved to be resilient during times when the expectation was that things would be quite different such as during pandemic lockdowns. It could be that the dream of ownership is enough to keep interest in the market. Despite the higher interest rates, they are still attractive in terms of what was normal before the economic recession.

The final quarter of the year is nearing and as autumn sets in and the holidays approach, many buyers will be moved to enter the market to fulfill their homeownership dreams which could keep the market in growth and assist a worrisome economy.