Largest August price drop since 2018 despite mini Burnham bounce in demand
- Average newly-listed asking prices drop by 2.0% (-£7,360) this month to £364,999, a much larger than usual August drop:
- Many summer sellers slash their price expectations in reaction to the quieter holiday period and 12-year high number of homes for sale at this time of year
- Average prices are now 1.0% lower than a year ago, the largest annual price fall since December 2023
- However, the national average figure masks an increasingly divided regional picture for property price growth, with the year-on-year difference between the northern and southern regions of England particularly stark, and Scotland is performing well:
- Prices in the north of England are up by 1.5% versus a year ago, while prices in the south of England are down by 1.8%
- The largest drop is in London, with prices down by 3.1% annually. The capital is seeing the largest choice of homes since 2010 leading to fierce competition among sellers to tempt buyers in the costliest part of Great Britain
- Since Andy Burnham became Prime Minister on July 20th, there’s been a mini bounce in buyer demand, up by 5%. Buying activity is still 10% lower than last year, but this boost could pave the way for a busier Autumn after the subdued summer
- The average two-year fixed mortgage rate is 5.09%, up from 4.92% last month as uncertainty continues in the Middle East
- Rightmove downgrades its national average 2026 price forecast to between 0% and -2%. The uncertain geopolitical picture, changing mortgage rate landscape, and new Chancellor’s first Budget in October making it difficult to predict the rest of the year
The average asking price of a newly-listed home coming to the market for sale falls by 2.0% (-£7,360) this month to £364,999. Prices usually fall in August, but this is a much larger August price drop than the ten-year average of -1.3%, and the largest since 2018. The number of available homes for sale is at a 12-year high for this time of year. When combined with the traditionally quiet summer holiday period, this has led to lower price expectations from sellers who have decided to come to market at this time of year, despite the lower volume of active buyers. Encouragingly, it appears that these sellers are taking the advice of both estate agents and Rightmove, and entering the market at competitive prices, giving themselves a much higher probability of selling. The average asking price for a home is now 1.0% lower than at this time last year, the largest annual drop in prices since December 2023.
“This month’s larger-than-usual August price drop is a sign that many sellers are recognising the reality of the market and pricing much more competitively from day one. Buyers have the widest choice of homes for sale at this time of year in more than a decade, so standing out on price for the right reasons is hugely important. While no seller likes to come to market lower than they might have hoped, Rightmove analysis shows that those who price realistically are statistically proven to be giving themselves the strongest chance of finding a buyer and successfully completing a move. One tactic some sellers are using when considering lower offers on their home, is to also make a lower offer themselves on their onwards purchase, to see if they can make up the difference.”
Colleen Babcock, property expert at Rightmove
National averages are helpful in identifying trends over time, but increasingly this year they are masking a divided regional picture for property price growth. The northern regions of England have actually seen average new seller asking prices increase by 1.5% versus last year, while the southern regions of England have seen prices drop by 1.8%. London has seen the biggest yearly fall in prices of any part of Great Britain at -3.1%. Conversely, prices in the North West are up the most, by 1.9% annually. Average prices are also higher in Scotland compared to last year, and only marginally down in the Midlands and Wales.
Looking more closely at the capital, the number of available homes for sale in London is the highest it’s been in sixteen years, outpacing the national trend, and meaning even more competition for sellers to find buyers. London is also facing a unique set of circumstances beyond just supply and demand trends which is creating challenges for some movers. In terms of affordability, despite wage growth out-performing property price growth in recent years, an average home in London still costs around 17 times the national average annual wage. London is also priced 38% higher than the second-highest priced region the South East. While high prices in London are nothing new, when combined with elevated mortgage rates, it’s a reminder of just how affordability-stretched London buyers are. Not only do Londoners also pay higher stamp duty fees overall, but last year’s reduction in thresholds, alongside the Lifetime ISA price cap of £450,000, disproportionately affects first-time buyers in London. The capital is also home to a greater share of flats, which while providing a crucial route to home-ownership for many, come with additional cost considerations and wariness from some buyers, and can lead to longer selling times and lower prices.
Although buying activity is still around 10% below last year’s level, Rightmove has recorded a mini bounce of +5% in buyer demand since Andy Burnham came to power on the 20th July. Comparatively, last summer saw a drop of 2% over the same period. The new Prime Minster has brought a general boost to optimism and has ruled out property tax changes in October’s Budget, meaning buyers have fewer reasons to wait around and see what happens. While it is still early days, it gives some encouragement that after a subdued summer, where several heatwaves and the World Cup provided added distractions, the market could see a busier than usual Autumn. Elevated mortgage rates do continue to stretch buyers, with Rightmove’s daily mortgage tracker showing that the average two-year fixed mortgage rate is now 5.09%, up from 4.92% last month. However, there are signs that there is room for some downwards movement in rates over the coming weeks. The changing picture for mortgage rates, alongside geopolitical uncertainty and the new Chancellor’s first Budget in October, highlights how uncertain the market is right now. Consequently, Rightmove downgrades its price forecast for 2026 from +2% to a change of between 0 and -2% in average new seller asking prices over the year as a whole.
“National average prices are increasingly masking very different local market conditions. While asking prices across both northern England and Scotland continue to edge upwards, southern England is moving in the opposite direction, with London seeing the biggest annual price fall. Alongside an abundance of choice, the capital faces greater affordability challenges for buyers, through both high price to income ratios and higher taxation. The mini Burnham bounce and some renewed general optimism have brought a degree of improvement to the market as a whole in recent weeks. Whether that develops into a more sustained recovery will likely depend on confidence, mortgage rates and the new Chancellor’s first Budget this Autumn.”
Colleen Babcock, property expert at Rightmove
Experts’ views
Matt Smith, Rightmove’s mortgage expert says: “Confidence has taken a bit of a hit as fixed-rates remain elevated and return above the psychologically important 5% mark. However, the mortgage market remains highly competitive, with lenders still keen to attract business and support borrowers. Many lenders have built greater resilience into their pricing, meaning they are generally better prepared to absorb shorter-term market shocks, which gives movers more stability even during periods of uncertainty. There are signs that, because of this additional buffer that lenders have built in, there is some scope for mortgage rates to reduce over the coming weeks, despite the geopolitical landscape still being quite volatile, and they have already started to edge downwards.”
Marc von Grundherr, Director of Benham and Reeves, says: “There’s no denying that London is having a more challenging year than many other parts of the country and affordability is at the heart of it. Higher property values mean London buyers feel every pressure point more acutely, whether that’s mortgage costs, stamp duty or the fact that many first-time buyers simply find themselves beyond the useful reach of schemes such as the Lifetime ISA.
“However, I wouldn’t characterise the London market as being in any sort of serious decline. What we’re seeing is a much more price-sensitive market and sellers who acknowledge that are still finding buyers. The difficulty arises where asking-price expectations remain anchored to a market that no longer exists, and that is particularly evident within parts of the flat market where buyers are also scrutinising service charges, lease terms and the wider cost of ownership far more closely than they perhaps did previously.”
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