UK housing market showing signs of mortgage rates impact, Rightmove says

LONDON - British property prices climbed in October, but rising mortgage rates due to the Iran war may be affecting affordability, according to the UK's Rightmove. While prices increased by 1% compared to the previous month, they rose by only 0.7% in October 2022. This modest growth is below the usual October rise of 1.3%. Property expert Colleen Babcock noted that the trend suggests mortgage costs are putting pressure on buyers, particularly in lower-priced markets.

Asking prices were 0.1% lower than a year ago, following a 0.8% drop in September. The average two-year fixed mortgage rate jumped to 5.55% from 5.29% in October, a significant increase from 4.25% in February, before the Iran conflict began. Buyers remain uncertain ahead of the finance minister's upcoming budget, and some first-time buyers are waiting for more details on the First Home Scheme.

Sellers in more affordable areas, previously resilient, are lowering their asking prices to cope with affordability challenges. Overall sales agreed were 8% below the same period last year, and the number of homes available for sale remains the highest since 2014.