Property sellers are cutting prices by an average of £14,100 – or 4.5% – according to Zoopla. It’s the biggest discount in five years, and means giving up a third of their pandemic price rise. 40% of properties on Zoopla have had price cuts and the average estate agent has 24 homes for sale – up from 15 a year ago.
“The property market has been tipped into the bargain bin, with buyers slashing prices by an average of £14,100. These are the biggest discounts in five years, and are a sign that prices are on their way down. However, it’s not necessarily the property market’s ‘closing down sale’, because there are still some positives.
We’re definitely in a buyers’ market, and we can see clear signs of a slowdown. The annual increase in asking prices is now just 5.3%, and has been shrinking with each passing month. Buyer demand has fallen by half from last year, and sales volumes are down by a quarter.
More properties on the books means those buyers who remain are able to drive a harder bargain. It means the gap between asking and selling prices isn’t just wider than we saw during the boom years – it’s wider than before the pandemic. We still expect house prices to drop during 2023, and for sales to freeze up. Zoopla says we could get year-on-year falls as early as the summer.
Property is in the bargain bin, but it’s not necessarily heading for landfill. It’s worth bearing in mind that we’re not seeing new demand lows – we’re actually still ahead of interest levels in the two years before the pandemic. Mortgage rates have now dropped back significantly from the peaks in the autumn, and although they are still far more expensive than a year ago, the fact they’re on their way down could help rebuild some of the confidence crushed by surging rates at the end of last year. It’s unlikely to be enough to see the return of the sellers’ market, but it could help avoid catastrophic house price falls”, commented Sarah Coles, head of personal finance at Hargreaves Lansdown.