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Drop in Asking Prices, But Homeowners Won’t Move
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
Homeowners awaiting the traditional huge summer decrease in house prices will be disappointed by Rightmove’s latest report, which reveals that asking prices for homes coming onto the market dropped by just 0.8% in August.
In England and Wales, the annual summer fall was much less sharp that at any point since the recession, according to the property portal.
Drop in Asking Prices, But Homeowners Won’t Move
The average August decline in asking prices is 1.5%.
Rightmove also found that the main reason prospective vendors are not selling is because they cannot find anywhere to buy, stated by one in five respondents. A similar number said moving is too expensive and 15% said they couldn’t find an affordable property.
One in ten are waiting for house prices to rise in their area before selling.
Director of Rightmove, Miles Shipside, explains: “While new seller asking prices have been muted by the traditional summer holiday property slowdown, the underlying shortage of property coming to market compared to buyer demand has helped to deliver the strongest August price performance since before the credit crunch.
“Buyers can normally pick up some bargains in August, as sellers who are marketing their homes when they should be holidaying often have a pressing need to sell and mark their prices down pretty aggressively.
“At 0.8% down on the previous month, this is the least generous that sellers have had to be for eight years and a clear sign of upwards price pressure in the pipeline.”1
In a separate study, the Mortgage Advice Bureau (MAB) found that increasing house prices and new affordability criteria by lenders are encouraging borrowers to apply for loans covering a longer period.
The MAB said that one in five homebuyers sought a mortgage lasting 30 years or more in the second quarter (Q2) of this year, double those looking for this term last year.
By taking out a mortgage over a longer period, borrowers can reduce their monthly repayments and pass affordability checks introduced in spring 2014.
Despite smaller monthly costs, the overall price of borrowing over this period is much higher. The MAB stated that on an average £151,668 home loan on a two-year fixed rate of 1.87%, borrowers with a 25-year term would pay £634 per month. Over a 30-year period, this drops to £551 and over 35 years to £493.
However, over a 35-year term, the mortgage would cost around £50,000 more in interest payments.
