The pressure on house prices is expected to continue over the next 12 months as competition among sellers intensifies.
The rapid rise in interest rates has pushed up the cost of mortgages and weighed on both transaction volumes and prices.
Rightmove, the property search website, believes that the average asking price for a property will be 1 per cent lower nationwide by the end of next year, with sellers probably needing to market their homes more aggressively to secure a deal.
Prices have held up better this year than Rightmove expected. A year ago, the property specialist predicted that the average asking price would drop by 2 per cent, but they are only 1.3 per cent lower year-on-year. However, the average time for a seller to find a buyer has jumped from 45 days a year ago to 66 days.
Broader data has been mixed. In October, transaction volumes declined by an annual 17 per cent to 90,920 and were 2 per cent lower than September, according to HM Revenue & Customs. Mortgage approvals, a more forward-looking measure, rose for the first time in three months, up 8 per cent on September.
Average mortgage rates have fallen steadily since July, with the average two-year fixed rate now at 5.52 per cent, down from 5.77 per cent a year ago, and the average rate on a five-year fixed mortgage at 5.17 per cent, from 5.52 per cent this time last year.
However, affordability remains stretched for many buyers, Rightmove’s property experts said. The Bank of England has signalled that base rate cuts are not imminent and lending rates are likely to remain elevated next year.
Tim Bannister, head of data at Rightmove, said: “This year has been better than many predicted, with no significant signs of forced sellers, lower-than-expected price falls and good buyer demand for the right-priced quality properties. However, it has been a challenging change in mindset for some sellers to transition from the frenzied market of the previous few years. The level of sales being agreed is 10 per cent lower than at this time in the more normal market of 2019, so sellers will need to price even more competitively next year to make sure that they secure a buyer.”
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Selling your home could be about to become a lot harder