Property asking prices slipped in June, as sellers faced the toughest competition in a decade to find buyers.
The “unusual dip” in prices – by 0.3% to £378,420 – compares with an average increase of 0.4% in June over the past 10 years, according to the property portalRightmove.
Buyer demand is now 3% higher compared with last year, Rightmove found, while the number of homes coming to market is 11% ahead. Such a wide variety of choice means the market is highly price sensitive, the company said.
The government ended temporary stamp duty cuts in England and Northern Ireland in April, adding thousands of pounds to the costs of many transactions this tax year.
Colleen Babcock, a property expert at Rightmove, said: “It appears that we’re now seeing the decade-high level of homes for sale, and the recent stamp duty increases in England, have a delayed impact on new sellers’ pricing.
“Agents have been telling us that sellers need to set a competitive price to have a better chance of finding a buyer in the current market, and it looks like many are listening and responding to that message.”
Asking prices fell most rapidly in the south-west, south-east and London in June, down 1.6%, 1% and 0.9% respectively, Rightmove found, highlighting that buyers in these regions were disproportionately affected by recent changes to stamp duty and that some sellers may be reducing their prices to account for this.
The largest increases in available homes for sale compared with last year were also in the south-west, the south-east and London, Rightmove said.
While buyer demand is rising, separate research from the estate agent Hamptons suggests demand in the rental market weakened in May.
There were 17% fewer tenants registering in lettings branches in May compared with the same time last year, it found.
So far this year there have been 1.5 times as many tenants registering to find somewhere to rent compared with each first-time buyer. That is almost half the level when mortgage rates peaked in 2022 and 2023, which priced many potential buyers out of the market.
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Aneisha Beveridge of Hamptons said: “Landlords rolling off short-term fixed-rate mortgages are now seeing their monthly payments fall, reducing the need to pass on further costs to tenants.
“At the same time, lower mortgage rates are changing the arithmetic for tenants who are thinking about buying. While rates remain high relative to pre-Covid times, three years of above-inflation rental growth mean that for most, buying remains cheaper than renting. This has boosted first-time buyer numbers and reduced demand in the rental sector.
“It has taken the best part of two years for the pace of rental growth to fall from double digits down to 1.5%. This means that rents are now rising at a rate that’s close to their long-term average, and suggests that the era of rapid rental growth is behind us for now.”
However, she noted that rental growth was unlikely to fall back much further. “Landlords are increasingly getting their heads around what the renters’ rights bill will mean for them, but the way it plays out for landlords in reality will shape future investor appetite,” she said.
The bill, which is not yet finalised, is expected to pass into law this summer. It is designed to give tenants greater protection, including the abolition of section 21 evictions and strengthening renters’ rights to request a pet in the property.