House prices drop for the first time this year, says Rightmove

Asking prices for homes have dropped for the first time this year, down £4,795, because of a summer lull in activity, says sales portal Rightmove.

Although interest rates are rising - which would increase the cost of a mortgage - it said seasonal factors were key to the drop in prices.

The typical asking price fell by 1.3% between July and August to £365,173.

The last two years had been "frenzied" in the UK housing market, said Rightmove.

Prices soared as the pandemic prompted many people to search for more space in which to live and work.

How big an impact the rising cost of living, and consistent increases in interest rates, will have on the housing market will be watched closely.

Tim Bannister, Rightmove's director of property science, said: "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."

The 1.3% drop in August was in line with the average drop seen that month over the past 10 years, Rightmove said.

"We are still expecting price changes for the rest of the year to continue to follow the usual seasonal pattern, which means we'll end year at around 7% annual growth, even with the wider economic uncertainty," Mr Bannister added.

He said that data showed the rising interest rates were yet to have a significant impact on the number of people wanting to move home.

"For those looking to move who are concerned about interest rate rises, it's important that they get a mortgage in principle early on in their moving journey to understand what they could afford to borrow, and find out about the rates available to them to assess what they are able to repay each month," he said.

The average five-year fixed rate mortgage has now breached 4%, according to Moneyfacts.co.uk, but experts expect rates to climb further.

The biggest risk to making mortgage repayments is usually the loss of a job, but anyone in that position should get help, at least in the short-term, from their lender.

Debt advisors say anyone in financial trouble should talk to their mortgage provider as soon as possible.