Average asking prices for newly listed homes rose 1% in October, adding about £3,600 to reach £371,000, according to Rightmove.
Prices remain virtually flat against a year ago, down 0.1%, and the national increase masks mixed seller reactions as higher mortgage rates intensify affordability pressure in a price-sensitive market.
Mixed seller reactions to affordability pressure
Rightmove’s daily mortgage tracker puts the average two-year fixed mortgage rate at 5.55%, up from 5.29% a month ago and 4.25% before the war in Iran began in February. That adds around £250 a month to the cost of a typical new mortgage and squeezes many buyers’ budgets.
Higher borrowing costs now appear to be hitting harder in regions that had held up relatively well this year. Sellers in four of the five lowest-priced areas cut their asking prices in October:
- North East: down 2.0%
- Scotland: down 1.9%
- North West: down 0.6%
- Wales: down 0.3%
Yorkshire and the Humber was the exception, rising 0.3%.
“The rapid rise in mortgage rates is really beginning to hit buyers’ budgets,” said Colleen Babcock, property expert at Rightmove. “We’re now seeing mortgage rate rises feed through to seller pricing in many of the cheaper parts of Great Britain, where prices had been more resilient this year. It’s an early sign that higher mortgage costs are putting pressure on affordability even in markets with lower property prices, affecting the areas and types of property that buyers can afford.
"This is a stark reminder of how price-sensitive the market is, and the message from agents, backed up by our data, remains the same - that competitive pricing from day one of marketing is critical to capitalise on initial buyer interest.”
London recovers some summer losses
Asking prices in London rose 2.5% in October, the biggest increase in Great Britain and a reversal of the longer-term trend. The rise follows a weak summer, when prices in the capital fell 6% across July and August, and new sellers are now clawing back some of that ground. London remains the weakest region annually, with prices still 1.7% below a year ago.
Rightmove points to other factors behind the jump. London typically sees stronger seasonal price growth at this time of year, as sellers with flexibility on timing come to market in autumn, when more buyers are active, rather than in the slower summer. The effect is most pronounced at the top end, where Inner London prices rose 3.9% and lifted both the national and London averages.
Some London sellers, coming off a subdued year, may feel they have little room to go lower without making their onward move unaffordable. Sellers in more northerly regions, who have had a stronger year for prices, may have more room to adjust their expectations.
Wider indicators do not support a broader London recovery. Sellers in the capital are cutting the price of 38% of listings, homes take an average of 78 days to find a buyer, and fewer than half of homes (42%) successfully find one. London performs weakly on all three measures compared with the rest of Great Britain.
Sales hold up as Budget approaches
Sales activity has shown resilience so far despite mortgage rates climbing in recent weeks, with deals still being agreed on the right properties at the right price. Rightmove’s real-time daily data shows the number of sales agreed is 8% lower than a year ago, evidence of tougher conditions this year, though broadly in line with the year to date. Rightmove reads the fact that sales have not fallen further, despite volatility in the mortgage market and higher costs since February, as a positive sign for underlying demand.
The number of new potential buyers contacting agents is 9% lower than a year ago, while new listings are 3% higher. The number of homes for sale stands at its highest for the time of year since 2014, which Rightmove says is contributing to muted growth in new sellers’ asking prices.
The Budget is the next focus. Financial markets will be watching how the announcements affect the outlook for government borrowing, inflation and interest rates. Some first-time buyers may be waiting for more detail on the recently announced Your First Home scheme for new build properties, while other households consider what the wider announcements could mean for their finances.
“Higher mortgage rates are putting pressure on affordability across Great Britain, but sellers appear to be responding in different ways,” she added.
“Some have room to lower their expectations, while others need to hold firm on price to make their next move add up, even if that means waiting longer for a buyer. In such a price-sensitive market, the guidance and expertise of a local agent are paramount.
"The forthcoming Budget adds some uncertainty too, with financial markets hoping that will improve the outlook for interest rates, while potential home-movers will be waiting to see how they are directly or indirectly affected.”
Industry views
“It’s been a difficult few weeks for home-buyers who have been watching mortgage rates rise quickly, particularly for those who had worked out what they could afford based on lower rates earlier in the year,” noted Matt Smith, mortgage expert at Rightmove. “Some buyers will understandably be reassessing their budget and what they can afford or feel comfortable borrowing.
“The fact that sales activity hasn’t fallen back further so far shows that many people still want to get on with their move. Monthly budgets are going to be stretched, but the market is incredibly hard to predict, particularly with so many complex global factors affecting the cost of borrowing, so home-movers must also concentrate on what’s in front of them.
"Whether it’s borrowing less, finding a larger deposit, or negotiating the price down on an onward move to accept a lower offer, there could be options for home-movers to explore.”
“There’s certainly an element of seasonality at play, with the summer firmly behind us and the London market gearing up for one final push before Christmas,” commented Marc von Grundherr, director of Benham and Reeves.
“However, we’re also seeing something of an ‘enough is enough’ mentality among London sellers, many of whom recognise that while the market has been subdued this year, London bricks and mortar remain one of the strongest assets they can hold. For these homeowners, selling for anything less than what they consider a reasonable price simply isn’t a sensible move, particularly if they have little urgency to sell.
“There’s also a degree of renewed optimism surrounding the Autumn Budget, with the prospect of further government measures to stimulate the housing market helping to improve sentiment, even if the finer details remain unclear. At the top end of the market, we also have the looming mansion tax to consider. While speculation around reducing the threshold to £1.5 million has now been put to bed, owners of properties valued above £2 million still face an additional annual tax from April 2028.
“This could well be encouraging some higher-value London homeowners to bring forward their selling plans, with a greater concentration of these properties coming to market also helping to push the capital’s average asking price higher.
"Of course, stronger asking prices don’t necessarily translate into stronger achieved prices, and sellers will still need to be realistic if they want to secure a buyer in what remains a relatively price-sensitive market.”
