The housing market in the UK is experiencing a significant slowdown, with the number of house viewings plummeting compared to last year. According to Propertymark, the average number of viewings per property has fallen by 98% compared to August 2022. In July, there were only 1.5 viewings per available property, compared to 3 viewings per property in June and 4.4 viewings per available property in July and August last year.

One of the contributing factors to the decline in viewings is believed to be higher mortgage rates. The average five-year fixed mortgage rate is currently 6.22%, while the average two-year fix is 6.76%. These rates are significantly higher than they were in the summer of 2022. It is important to note that the lowest five-year fixed rate on the market is 5.22% and the lowest two-year fix is 5.77%.

Expert Opinions:

1. Nathan Emerson (Propertymark boss) says the market’s still pretty lively, but it’s mostly the serious buyers and sellers who are active. If a house’s price matches the market, it’s selling quickly – “As the number of viewings drop, this indicates a shift to only the more serious homebuyers and sellers that are remaining proactive in the market.”
2. Jeremy Leaf (Estate agent expert) mentions that if a house is priced right, it’s selling fast, especially to buyers who have the cash ready. On the flip side, homes priced too high are just waiting around – “On the ground, we’re seeing realistically-priced properties are still selling relatively quickly particularly to ‘cash’ or equity-rich buyers whereas those requiring reductions to attract more attention are sticking.”

The housing market slowdown is also reflected in asking prices. Rightmove reports that the average new seller asking prices fell 1.9% this month to £364,895. This is the largest drop in August since 2018 and is equivalent to a decrease of £7,012. While lower asking prices may attract some buyers, it does not necessarily result in increased sales. Sales agreed remain disappointingly low.

Despite these challenges, Propertymark suggests that the sales market remains buoyant for serious homebuyers and sellers who are actively engaged. Properties that are realistically priced and in line with market conditions are still selling quickly, especially to cash or equity-rich buyers. The employment market and stable mortgage rates are creating some interest in the market, despite distractions such as summer holidays.

While the number of viewings is decreasing, there has been an increase in the supply of new homes hitting the market. Propertymark’s latest report shows a positive lift in July, with an average of ten new homes placed for sale per estate agency branch. This has resulted in a slight increase in the total stock of properties available per branch, with an average of 38 in July compared to 32 in June. Compared to July last year, there are also 37% more homes on the market, which is the highest level recorded in the past 12 months.

The increase in supply could lead to a decrease in prices if demand from buyers does not keep up. In July 2023, the average number of new prospective buyers registered per member branch dropped to 64, compared to 86 in June 2023. Propertymark’s report also reveals that 81% of estate agents reported house prices selling for less than the asking price in July.

Overall, the UK housing market is currently facing significant challenges with a sharp drop in the number of viewings, lower asking prices, and a decrease in sales agreed. However, there are still opportunities for serious homebuyers and sellers who are proactive in the market, especially if they price their properties realistically.

The increase in supply could potentially lead to falling prices if demand does not keep up. It is important for prospective investors to carefully evaluate market conditions and consider factors like mortgage rates, employment trends, and demand before making investment decisions.