UK house prices down 2.9 per cent in a month, London’s drop 5.9 per cent
After the great heating comes the cooling: according to the latest figures from Rightmove the property market is slowing down.
House prices across England and Wales were down 2.9 per cent, constituting the biggest drop Rightmove has ever seen in August. London prices, forever ahead of the curve, fell by 5.9 per cent.
Every borough in the capital saw prices drop, with the biggest fall being in Wandsworth.
Overall the index is up 5.3 per cent nationally in the last 12 months.
Speculation is mounting that the drops could be linked to the talk of interest rate rises – now pencilled in for February 2015 on economists' calendars – with buyers unsure of the long-term mortgage payments they will be letting themselves in for.
With inflation and house price growth both outstripping wage increases this year (inflation is expected to be 1.9 per cent for the year, wage growth 1.25 per cent), there may well be caution creeping in to buyer sentiment.
This is August however; the month of thinner financial papers, holidays in the Algarve and drops in house prices. What is more, Rightmove doesn't seasonally adjust its figures and uses initial asking prices for its calculations.
These facts should be taken in to account, not least because asking prices are usually a lot higher than selling prices (in July there was around £86,000 difference between a Rightmove asking price and the mortgage loan indicators Halifax and Nationwide use) so the difference between the measures may be interesting. We'll need to wait for that.
For now, this is the biggest drop Rightmove has seen, and it comes on the back of the lower price increases reported by Nationwide and the Land Registry. Here is a graph charting the month-on-month changes over the last year:
Rightmove itself said that prices were falling because people were more aware of personal finance and the "cost of mortgages going up."
In London, said Miles Shipside, Rightmove director and housing market analyst,
The number of newly-marketed properties, [was] up 20% compared to August last year, and double the figure seen in any other region. More sellers and fewer buyers mean price falls.