Despite a recent 12% spike in homebuyers over the past month, sellers are still having to offer an average reduction of £12,125 to close deals, as per the latest Zoopla House Price Index.
While this resurgence in buyer interest is the first notable increase since spring, it lags roughly a third behind the demand witnessed this time last year. Interestingly, even with mortgage rates biting into their purchasing power by a fifth, prospective buyers show no signs of lowering their property size expectations.
The past year has witnessed UK property values decline by 0.5%. Even though forecasts suggest a further drop of 2-3% by the year’s end, it’s important to highlight that prices are still a considerable 17% above pre-pandemic figures.
Currently, sellers are having to mark down their asking prices by an average of 4.2% for new sales, equating to a £12,125 reduction. This trend is especially pronounced in London and the South East, where the average discount reaches 4.8%. In contrast, other parts of the UK are experiencing a milder average discount of 2.8%.
Nathan Emerson, CEO of Propertymark, commented: “This recent report reiterates what our member agents are telling us. Last month there was a 29% rise in the number of new properties for sale which shows many people are continuing to find an affordable middle ground when coming to the market and negotiations well underway.
“We imagine this picture will only get stronger with more sales completing in the coming months given the recent positive news of inflation rates remaining unchanged, given much-needed encouragement to those buyers who were hesitant.”
Richard Donnell, Executive Director at Zoopla, said: “The housing market continues to adjust to a higher mortgage rate environment. Better news on inflation and the end of base rate increases has provided scope for lenders to start reducing mortgage rates which has supported a modest uptick in demand for homes this September. Buyers continue to remain cautious and many are waiting for better value for money and improved affordability from lower house prices or further falls in mortgage rates before returning to the market.
House price falls have been modest with the average house still 17% more expensive than before the start of the pandemic. Forbearance by lenders, tougher mortgage regulations over recent years and a strong labour market appear to have moderated the stress in the market compared to previous cycles that would have driven larger price reductions.”