Asking prices on homes fell by an average of nearly £8,000 this month as high mortgage rates force sellers to slash their expectations, new data has shown.
The average price of property coming to market in the last month fell by 2.1pc – the largest monthly drop recorded in four years, according to property website Rightmove.
This was the second monthly drop in a row, after a 1.1pc fall in November, and brought the average asking price to £359,137 – £7,860 less than a month earlier.
Prices fell most dramatically in the South West, where asking prices plunged by 3.4pc to £373,049 – a loss of £12,680.
After the South West, asking prices fell most steeply in the South East, which recorded a 2.7pc monthly drop. This meant the average home cost £12,770 less than in November.
Across the market, asking prices were still 5.6pc higher than a year ago, but the annual growth rate had slowed significantly from 7.2pc in November.
The average number of days for a property to find a buyer climbed for the sixth month in a row to 45, up from 32 days in June.
Tim Bannister, of Rightmove, said: “It’s an understandable short-term reaction to the economic turmoil and unexpectedly rapid mortgage rate rises and reduction in availability of mortgage products that we saw in late September and October.”
Buyers have seen their budgets drastically reduced after mortgage rates rocketed this autumn. Rates on fixed-rate deals have declined slowly but steadily from their peak in October, after Jeremy Hunt was appointed Chancellor and scrapped the bulk of the mini-Budget, but they are still nearly triple what they were a year ago.
There are signs that the decline since October is starting to coax buyers back to the market, however. Buyer demand in the two weeks to Dec 3 was up 4pc compared to the same period in 2019.
Buyers may wait to see if mortgage rates decline any further. Rightmove warned of a “stand-off” while sellers hold out for a price that matches their expectations in the first few months of 2023.
Rightmove forecast that house prices will drop by 2pc next year, but that this will mask major variations on a local level.