Are UK house prices going down? Rightmove HPI explained

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After the Bank of England forecast a recession and hiked interest rates, there has been speculation that a UK house price crash is imminent

According to the RightmoveHouse Price Index for August 2022, average house prices fell 1.3% month-on-month – that’s £4,795 less than a typical house price.

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So what exactly is the Rightmove House Price Index showing – and will we see UK house prices fall?

UK house prices have fallen month-on-month but remain much higher than pre-Covid levels (Image: PA)

What is the Rightmove Home Price Index?

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The Rightmove House Price Index (HPI) is a UK property market tracker operated by one of the country’s largest property websites.

It takes into account the asking prices of up to 200,000 homes listed by 13,000 estate agents across the UK each month – although it excludes central London, as Rightmove says the “normal housing ladder doesn’t really apply there”.

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According to Rightmove, this means its measurement covers 95% of the UK market.

The HPI differs from other major home price measures, such as the Nationwide HPI, in that it sees asking home prices as they come to market.

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Other indices tend to look at prices later in the buying process, including at the mortgage application stage and the final sale prices as listed at the public entity, the land registry.

So, essentially, the strength of the Rightmove HPI is that it captures seller sentiment closer to their current sentiment.

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Rightmove says latest home price index does not signal impending home price crash (Image: PA)

It divides the asking prices into three different sectors:

  • First time buyer: Rightmove says the number tends to cover properties that a first-time buyer would be more likely to consider, such as B. Two bed houses.
  • ‘Second Steppers’ (i.e. those moving out of their first apartment): covers three and four bed homes but excludes four bed single family homes.
  • Top of the Ladder buyers: includes five bed homes and up as well as four bed single family homes

What does Rightmove’s latest home price index show?

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The latest Rightmove House Price Index was released on Monday (15th August).

It covers properties listed for sale between July 10 and August 6, 2022 and showed that house prices fell by 1.3% compared to the previous month’s HPI.

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This means the average UK house price has fallen by £4,795 to £365,173 – the first fall of the year so far but in line with August in previous years.

The biggest fall was seen among Rightmove buyers, who saw average prices fall by 2.6% (£17,507) to an average of £665,304 compared to July.

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‘Second steppers’ saw prices remain relatively unchanged at £338,757, while first-time buyers saw a slight 0.4% (£852) drop to £224,091.

In a broader context, the average price for August 2022 is still 19.5% higher than the same month in 2019.

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Earlier this year, Rightmove said house prices had risen by £55,000 since the pandemic.

The August 2022 HPI is also 134% higher than August 2002 (when the average price was £155,994), meaning prices reflect average wage package growth (up 76%) and overall inflation (93% – measured on RPI) have surpassed last two decades.

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Meanwhile, Rightmove said buyer inquiries were down 4% year over year but remained a fifth higher than 2019.

New registrations were up 12% from August 2021 but were 6% lower than 2019.

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The other key finding from Rightmore’s research was that average monthly mortgage payments for first-time buyers with a 10% down payment had exceeded £1,000 for the first time.

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