The average asking price of a newly listed home fell 2 per cent this month to £364,999, a drop of £7,360, according to Rightmove’s latest house price index, published today. Prices usually dip in the quieter summer months, but this was the biggest August fall since 2018.
The decline came despite a 5 per cent rise in buyer demand since Andy Burnham succeeded Sir Keir Starmer as prime minister on 20 July, Rightmove said.
The north-south divide is sharpening. Asking prices in the north of England, which Burnham has promised to champion during his premiership, are up 1.5 per cent on last August, while prices in the south of England are down 1.8 per cent.
Sellers are also fighting for attention in a crowded market. The number of homes listed on Rightmove’s site has reached its highest level in 16 years, which the portal said reflected strained affordability preventing people from buying a property in the capital.
Colleen Babcock, a property expert at Rightmove, said: “Despite wage growth outperforming property price growth in recent years, an average home in London still costs around 17 times the national average annual wage.”
Borrowing costs are moving the wrong way too. Average mortgage rates rose to 5.09 per cent, up from 4.92 per cent in July, as the war in the Middle East pushed global government bond yields sharply higher, a trend visible in the Bank of England’s quoted household interest rates data.
Cash-rich landlords drive the hardest bargains
Separate research from Hamptons, the estate agency, shows buy-to-let investors using their chain-free status and cash reserves to squeeze struggling sellers.
Landlords who bought last month secured an average discount of 11.3 per cent, and 56 per cent of them had made an offer at least 10 per cent below the asking price, according to Hamptons.
Investors buying without a mortgage were bolder still, with 63 per cent asking for a hefty discount. Just 25 per cent of first-time buyers and 27 per cent of home movers did the same.
Strikingly, investors are buying more, not less. The share of homes bought by landlords in Britain is up by nearly 2 percentage points this year, despite tougher renters’ rights and interest rates staying higher than expected, extending a trend that has seen the buy-to-let share of the market edge higher in the face of tax rises.
David Fell, lead analyst at Hamptons, said: “While higher borrowing costs continue to weigh on investment returns, landlords with cash or low levels of borrowing are finding that a slower market is creating opportunities to purchase at significantly lower prices than would have been possible a few years ago.”
Where sellers are most likely to cave
Landlords were most likely to try their luck in southeast England, where 70 per cent of investors made offers significantly under the asking price, according to Hamptons. The southwest followed at 60 per cent, the region with the highest proportion of holiday lets up for sale.
Nearly half of sellers in England and Wales were prepared to accept a lower offer, the research found, although the odds of a lowball bid landing depended on the property type, the location and how long the home had been on the market.
Leasehold properties, usually flats, are proving the most negotiable. Dampened demand caused by high maintenance and lease-extension costs, alongside building safety issues, meant 41 per cent of heavily discounted offers on these homes were accepted.
Time on the market matters as much as tenure. Sellers whose properties languished unsold tended to accept a lower offer after 140 days, Hamptons found, while owners in the northwest were the most likely to cave in to demands from lowballing landlords.
What this means for investors
The arithmetic for well-capitalised landlords is improving on both sides of the deal. Record stock, stretched sellers and a thin field of proceedable buyers mean investors who negotiate a lower house price firmly are being rewarded, just as they were when buyers snapped up discounted homes last summer.
The caveat is financing. With average mortgage rates back above 5 per cent, the discounts on offer matter most to cash buyers and low-geared investors, and the window may narrow if bond markets settle and rates ease into the autumn. For now, targets are clear: long-marketed homes, leasehold flats and holiday-let heavy regions in the south, where sellers are most willing to deal.
