The average price of property coming to market fell slightly by 0.2%, or £905 this month, to £371,907, marginally below the 0% norm for this time of year as new sellers temper their price expectations in response to recent Base Rate rises and increasing buyer affordability constraints.

The data, provided by Rightmove, suggests that price trends have proved more resilient than most expected during the first half of the year, with average asking prices now 2.6% higher than in January. However, the brakes on the economy being applied by the Bank of England to combat the surprisingly sticky inflation figures are biting, with the number of sales agreed in June now being 12% behind 2019’s more normal market level, contrasting with the surprisingly strong first five months of the year.

However, buyer demand appears to remain resilient, being 3% higher than at this time in 2019, with agents reporting that right-priced homes are still attracting motivated buyers due to the shortage of property for sale compared to historic norms.

Industry reactions:

Chris Druce, senior research analyst at Knight Frank, said: “Buyers have become increasingly cautious as expectations about the peak for rates have been revised upwards. It means that the residential property market is as price sensitive as its been since before the pandemic.

“While we are unlikely to see a material change in confidence levels until we have surety about how high borrowing costs will go, deals are still being struck and pricing is proving resilient.

“Ultimately, we expect prices to fall by 10% over this year and next as more pain enters the system as more fixed-rate mortgages are renewed at higher rates. However, strong wage growth, low unemployment, the forbearance of lenders and the availability of longer fixed-rate mortgages will safeguard against larger price falls, and provide the platform for a resilient performance in the housing market once the extent of the rate rises are known.”

Jeremy Leaf, north London estate agent, said: “These figures bear out what we’ve been seeing in our offices, particularly following the most recent increases in base rate.

“There are still plenty of especially cash or equity-rich buyers but they’re taking their time to view a slowly-increasing choice of properties.

“It’s only then – including after carrying out their own stress testing – that they’re making what are often cheeky offers.

“On the other hand, most sellers seem in no rush to accept significant discounts, at least for the time being.”

Adam Feather, managing director of Robert Anthony Estate Agents, said: “With fewer transactions taking place, as rising mortgage costs put greater strain on people’s finances, house prices will almost certainly fall in the coming months, although it is hard to forecast at this stage how deep the downturn will be. We are asking sellers to think twice about if they are being realistic when listing their property for sale.”

Conor Murphy, CEO and founder, Smartr365 and Capricorn Financial Consultancy, commented: “While you might expect first-time buyers to be one of the most impacted groups during economic downturns, they currently offer one of the strongest pockets of demand in the mortgage market. Correcting house price inflation and recent product innovation in this area has encouraged first-time buyers to press ahead with their purchases, particularly through gifted deposits or joint borrower sole proprietor mortgages.

“Given the renewed interest from first-time buyers, it is especially important that the industry works hard to integrate powerful technology tools that will help to attract, support, and retain this typically younger and tech-savvy group. Integrating innovative tech tools also offers significant time-savings for advisors – up to thirty minutes per application in the case of our recent Open Banking partnership with Nationwide and Experian – allowing them more time to do what they do best, offer insightful and personalised guidance to clients.”

Tomer Aboody, director of property lender MT Finance, said: “With continued rate rises negatively impacting affordability, many would-be buyers are no longer even able to consider purchasing and the market is slowing accordingly.

“Sellers not selling due to fear of being knocked down on their expected price and fewer buyers around due to confidence and lack of affordability, is contributing to falling transaction levels and pricing.

“Further uncertainty as to whether inflation will reduce quickly enough, combined with the potential for more rate hikes, is making the market unpredictable with no breathing space in sight. Now seems an opportune time for the Bank of England to pause the rises and see how the market, which has already been squeezed, responds.”

UK house prices continue to fall as interest rate rises bite