Britain’s housing market is showing early signs of strain as rising mortgage costs make homes less affordable, despite a modest increase in asking prices in October, according to property
website Rightmove.
The average asking price of newly listed homes increased by 1% between September and October, following a 0.7% rise in the previous month. However, the latest increase was below the typical seasonal trend, with asking prices historically rising by an average of 1.3% in October.
The figures cover properties listed between 13 September and 10 October and have not been adjusted for seasonal variations.
Rightmove said the latest data suggested that higher borrowing costs were beginning to affect buyers’ purchasing power, including in areas where property prices are generally lower.
Colleen Babcock, a property expert at Rightmove, said the impact of rising mortgage rates was becoming increasingly apparent in the parts of the market that had previously proved more resilient.
She noted that higher mortgage payments were putting additional pressure on affordability, influencing both the locations buyers could consider and the types of homes they could realistically afford.
Mortgage costs rise sharply
The increase in borrowing costs has become a growing concern for prospective homeowners. The average interest rate on a two-year fixed-rate mortgage climbed to 5.55% in October, up from 5.29% in September.
The rate is also significantly higher than the 4.25% recorded in February, before the outbreak of the war in Iran. The conflict has contributed to financial market uncertainty and rising borrowing costs, adding to the challenges facing households hoping to buy property.
Despite October’s monthly increase, asking prices remained slightly lower than a year earlier. Average prices for newly listed properties were down 0.1% year on year, marking an improvement on September’s annual decline of 0.8%.
However, the latest figures suggest that the combination of higher mortgage rates and stretched household budgets continues to limit demand.
Buyers adopt a cautious approach
Uncertainty surrounding the government’s forthcoming budget is also influencing decisions in the property market. Prospective buyers are weighing up whether to proceed with purchases or wait for greater clarity on potential policy changes.
First-time buyers, in particular, are looking for further information about the government’s First Home Scheme before making commitments.
At the same time, sellers in more affordable regions — which have previously shown greater resilience — are increasingly adjusting their asking prices to attract buyers facing tighter financial constraints.
The slowdown is also reflected in transaction activity. The number of sales agreed was 8% lower than at the same point a year earlier, indicating that fewer buyers and sellers are reaching agreements.
Housing supply remains elevated
While demand is showing signs of weakening, the number of properties available for purchase remains unusually high. Rightmove reported that housing supply was at its highest level for this time of year since 2014.
The greater choice available to buyers could intensify competition among sellers, particularly if mortgage rates remain elevated and households continue to face affordability pressures.
For homeowners seeking to sell, realistic pricing may therefore become increasingly important as buyers become more selective and take longer to commit.
The latest figures point to a housing market caught between modest price growth and weakening demand. Although asking prices have not fallen sharply, rising borrowing costs, uncertainty over government policy and an expanding choice of properties are creating a more challenging environment for sellers.
Rightmove’s data suggest that the direction of mortgage rates and the outcome of the forthcoming budget could prove important in determining how the UK housing market performs in the months ahead.
