Asking Prices Drop by £7,000 in December as Sellers Get Competitive
As we find ourselves in the midst of December, approaching the end of 2023, UK property asking prices have dropped by almost £7,000 on average.
These findings come from a new Rightmove report, which also showed that prices will fall in 2024. However, forecasts expect prices to regain their footing in 2025, meaning property investors are running out of time to find good-value buy-to-let investments.
Let’s look at the report in more detail and see what it means for property investment.
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Why Are Asking Prices Going Down?
While the slump in asking prices makes for glum reading if you are a seller, it is actually typical of the festive period.
Traditionally, asking prices drop in December as sellers try to remain competitive and attract buyers to their properties.
As such, if you are wondering how to invest in property, December stands as a good opportunity to get a reasonable price compared to other times in the year.
2023 has been a tough year for mortgages, with rates rising about 6% due to a surge in inflation and interest rates following the pandemic, the Ukrainian war and Kwasi Kwarteng’s 2022 mini-budget. There have been fewer buyers in the market as a result. However, inflation has fallen in recent months to 4.6%, while interest rates have held at 5.25%. As a result, mortgage rates have come down, with the cheapest dipping below 5%.
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What Do the Figures Say About UK Property Market Asking Prices?
From November to December, the average asking price fell by 1.9% to £355,177 – a £6,966 drop from the previous month.
Seasonal factors tend to affect December asking prices; however, this year, the drop is 0.4% over the average decrease of the last 20 years.
However, there are also signs that the market is continuing to shrug off the effects of a stalling UK economy, with prices dropping 1.1% year-on-year, forgoing predictions of a much steeper decline. This highlights how property remains one of the most low-risk investments in the UK.
Rightmove predicts prices to fall by a further 1% throughout 2024. However, tenant demand is set to remain high, which will likely lead to 6% rental growth, according to Savills.
Therefore, a savvy property investor may be able to enjoy higher-than-average gross rental yields. With prices lower and rent high, the UK buy-to-let market allows landlords to maximise their profits before prices rise in the future.
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Rightmove Reacts to UK Housing Market Asking Price Figures?
Rightmove Direction of Property Science Innovation, Tim Bannister, said the following about the Rightmove asking price figures:
“High mortgage rates, which have added to already-stretched buyer affordability, have been a challenge throughout 2023, and this is likely to carry into next year,” said Tim Bannister, Rightmove’s director of property science innovation.
“However, for now there appears to be more calm and certainty heading into 2024, and the annual fall of 1.1% in asking prices highlights the market’s much better than predicted resilience this year.”
Looking for more information on how to take advantage of the current property market landscape? Check out our guide on best buy-to-lets.
In addition, you may want to take a look at some of our buy-to-let guides, giving you an in-depth look at the property market in different cities. Some of those guides include: