Property website Rightmove says that the average price tag on a home coming to market has dipped by nearly £5,000 month-on-month, the first time that house prices in Britain have fallen so far this year - but estate agents and property experts say it isn't a cause for concern.

The figures equate to around a 1.3pc reduction – or £4,795 in cash terms - and the average asking price across Britain is now £365,173.

Tim Bannister, Rightmove’s director of property science, believes that the drop is likely to be a seasonal lull rather than a sign of wider trouble – despite the rising cost of living and rises to interest rates, which could be putting sellers and buyers off.

Prices usually fall in August, he says, and the 1.3pc drop is in line with the average price usually seen at this time of year – in fact, it mimics the data from the previous decade.

“A drop in asking prices is to be expected this month, as the market returns towards normal seasonal patterns after a frenzied two years, and many would-be home movers become distracted by the summer holidays,” says Mr Bannister.

In light of the past two years, which has seen “frenzied” activity due to the Stamp Duty holiday and demand for home movers due to the confines of the pandemic, a price drop of some kind was always expected, and although Mr Bannister believes that this month’s price drop is a seasonal trend, he says there are other signs the market is starting to cool.

“It’s likely that the impact of interest rate rises will gradually filter through during the rest of the year, but right now the data shows that they are not having a significant impact on the number of people wanting to move,” he says.

“Demand has eased a degree and there is now more choice for buyers, but the two remain at odds and the size of this imbalance will prevent major price falls this year.”

Jamie Minors, managing director of Minors & Brady, agrees that supply and demand remains an issue. “Whilst house prices in America and other parts of Europe are falling, we need to remind ourselves that we have limited land and limited availability of homes for sale,” he says.

“We are still not building anywhere near enough homes to match the demand. With the government's estimated target of 350,000 new homes per year, we are not even fulfilling half of that.”

New homes historically attract a lot of first-time buyers, but rising house prices and interest rates could make this more difficult, Rightmove suggests, as average monthly mortgage payments for new first-time buyers putting down a 10pc deposit will now exceed £1,000 – at £1,032.

At the moment, though, demand for properties in the typical first-time buyer sector remains strong – in fact it's 32pc higher than it was at this time in 2019.

Jan Hytch, chair of the Norwich & District Association of Estate Agents and partner at Arnolds Keys, urges caution when it comes to the declining figures. It is, she suggests, much more nuanced.

“The data about house prices falling in August relates to asking prices rather than the prices actually paid for property,” she says, “so it is likely that much of the drop is down to a correction in marketing prices rather than in actual value.

“The considerable media coverage about the cost of living, as well as rising interest rates, is causing buyers to think twice about ambitious over-bidding in order to secure their dream home against other potential buyers – and at the same time, sellers are heeding the economic climate and setting more realistic asking prices.”

It is the job of the estate agent to pitch the marketing price at the right level to encourage interest and offers, she says, so it's no surprise that downward adjustments are happening on homes that may have been pitched at a too ambitious price – particularly in a “blizzard” of stories about the cost of living.

Henry Cockerton, head of residential at Brown&Co, agrees that accurate valuation is key. “We’ve had multiple sales agreed well over asking prices in recent weeks, despite the rising cost of living and pressure on the housing market. However, we are starting to see over-valued property remaining unsold. Quality, location and professional advice is key.”

Jan agrees that a reduction in prices – and indeed market activity – tends to happen at this time of year, as buyers and sellers enjoy their summer holidays. She believes that a more stable market will return in autumn. “September, with the return of children to school and workers to workplaces, traditionally refocuses the minds of both buyers and sellers to moving home.”

For Jamie Minors, the market cooling isn't a bad thing, as long as there is still huge demand – which there is. “What we are seeing now is a transition from a boiling hot market to a lower temperature,” he says. “However, there is still crazy demand for top locations and prime properties. Minors & Brady is on target for a record-breaking sales month in August, despite being post-Stamp Duty holiday, post-Covid times and in a world where interest rates are rising.”

He says that although buyer enquiries are down 4pc compared with the “mayhem” of 2021, they are still 20pc higher than before the Covid outbreak, which still makes it a “very attractive” market to sell homes in. “Now is still a fantastic time to move,” he says, “but ensuring you’re using the right estate agent to negotiate your deal for you can be the difference of around £50,000, as some homes are still negotiating best and final offers well over the guide prices.”

Steve Pymm, managing director of Pymm & Co, based in Norwich, agrees that they have seen a “softening” in the market over the past three months, which was to be expected. “With several recent interest rate rises, and more believed to come to try and slow the current rate of inflation, coupled with increased energy bills, it was bound to happen.”

It’s expected that the market will correct and rebalance itself over the next six months, with house prices reaching a more stable annual growth of around 5-7pc.

Overall, though, Steve believes that the “massive” housing shortage means “there is no way” the market will crash, as the supply and demand issue has still not been met. “Until it has, houses in Norfolk will keep selling. In and around Norwich we are still 30pc lower priced per square foot than in Cambridge, so it’s still a great place to buy and live.”

Jamie Minors does, however, suggest that more challenging times could be ahead. “If inflation continues to rise, and interest rates are increased to combat this, then we will have a more challenging period, as home movers may not be able to afford to upsize as easily, and those separating will need to sell due to higher mortgage payments on eventual new rates.”

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