Buyers get £18k off homes as the market cools down

Buyers get £18k off homes as the market cools down

0:03 AM, 28th November 2023, About 7 months ago 2

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Buyers are getting an average of £18,000 off the asking price of their next home, according to one house price index.

Zoopla’s report shows that the UK housing market is cooling down as higher mortgage rates dampen demand and more homes for sale increase choice and bargaining power.

The gap between the listed and achieved prices for sales is now at a five-year high of 5.5% for transactions in the first half of November, compared to 3.4% in the same period of 2023. This is especially noticeable in the south of England, where the average reduction is 6.1% in London and the South East, or £25,000 in absolute terms.

‘The best conditions for home buyers’

Zoopla’s executive director, Richard Donnell, said: “These are the best conditions for home buyers for some years with more homes to choose from and with sellers more prepared to negotiate on price to agree a sale.

“There is a growing acceptance that what a home might have been worth a year ago is now largely academic given current market conditions.

“Sellers have plenty of room to negotiate with average house prices still £41,350 higher than the start of the pandemic.”

He added: “It’s a positive sign that new sales continue to be agreed at a faster rate than a year ago and pre-pandemic.

“This indicates that house prices do not need to post bigger falls to get people moving but sellers need to be ready for more negotiation on price.

“New sales will slow as we run up to Christmas and some sellers will take homes off the market ready to relaunch in the new year.”

New sales are still being agreed

Despite a 13% drop in buyer demand compared to 2019, new sales are still being agreed at a higher rate than last year, and 5% above 2019 levels.

This suggests that sellers are becoming more realistic, and buyers are anticipating lower mortgage rates in 2024.

The market is on track to reach one million sales completions in 2023, with strong activity in Scotland and inner London, where sales have lagged behind the rest of the UK in recent years.

Buyers have more options to choose from, as the number of homes available for sale reached a six-year high, with 34% more listings than a year ago.

The average estate agency branch now has over 31 homes for sale, compared to just 14 during the pandemic boom. This means that buyers can be more selective and negotiate harder, putting downward pressure on prices.

Three and four+ bed family homes

The increase in supply is mainly driven by the market for three and four+ bed family homes, which has seen a rebound across all regions of the UK, except Scotland, the North-East and North-West.

However, house prices are falling across most of the UK, with annual declines in all price bands – but there is no sign of a sharper drop in the most expensive markets, such as London.

In fact, London has lower annual price falls than the wider South East and nearby commuter areas, partly due to better value for money and a gradual return to office working, which supports sales volumes and price levels.

London house prices are still high in absolute terms, but they have grown much slower than the rest of the UK over the last six years.

The average value of a London home is only 8% higher than seven years ago, compared to 28% for the rest of the UK.

‘Black Friday has hit the property market’

The head of personal finance at Hargreaves Lansdown, Sarah Coles, said: “Black Friday has hit the property market, which means a bleak time for sellers.

“They’re having to slash 5.5% off asking prices to secure a sale, providing the biggest discounts for five years. This doesn’t bode well for the future of property prices.”

She added: “The root of the problem is a lack of buyers, because higher mortgage rates are pushing potential properties out of reach. Demand is down 13% from this point in 2019.

“At the same time, we’ve seen a rebound in the number of properties for sale – up a third in a year – so any potential buyers have plenty to choose from.”

Nigel Bishop, of buying agency Recoco Property Search, said: “Many sellers are still basing their asking price on the influx of buyer demand seen during the pandemic but fail to acknowledge that the market has begun rebalancing since.

“It is very much a buyer’s market right now and house hunters are more determined to negotiate the asking price or continue their search otherwise.”


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Comments

Easy rider

12:23 PM, 28th November 2023, About 7 months ago

Offers at 15% below asking price are being accepted in my area.

The penny is finally dropping. House prices are too high now that interest rates are near normal levels.

JB

14:15 PM, 28th November 2023, About 7 months ago

Maybe hi-tax Hunt will do something with SDLT in March 2024 to get things moving?

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