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Data from property platform Zoopla shows UK house sellers are increasingly cutting prices to secure deals despite the usually busy autumn selling season approaching.
Over the past four weeks, discounts have increased by 4.2% on the original asking price, with the average discount being £12,125, the highest level since March 2019.
A week after the Bank of England paused long-term interest rate hikes, there is evidence that more sellers are struggling to price in prices.
Stable borrowing costs will ease pressure on the housing market, but analysts say interest rates are likely to remain high for a long time, meaning house prices will need to fall further before market activity resumes.
“I get a lot of price reduction messages every day,” said Robin Thomas, a consultant at Recoco Property Search, a purchasing agency in southwest England. “There is a mismatch between what sellers expect to achieve . . . and what buyers are prepared to pay.”
Mortgage lenders lowered interest rates over the summer, easing affordability for buyers. According to Rightmove, the average five-year fixed mortgage rate is 5.54%.
Consulting firm Capital Economics predicts that borrowing costs will remain relatively high and house prices will continue to fall until mid-2024, with a cumulative decline of about 10% from the peak in August 2022. House prices fell 4.6% during the year, with the largest fall in August since 2009, according to Halifax data.
“It’s definitely still a buyer’s market,” said Richard Donnell, research director at Zoopla. “Asking price is not what the home is worth. It’s the starting point. In today’s market, buyers are negotiating bigger discounts.”
Donnell said a third of homes sold had their prices reduced, with one in 10 losing more than 10 per cent before finding a buyer.
Thomas said some agents initially overpriced properties in order to win instructions. Properties that don’t generate immediate interest are more likely to need a price reduction. But he added that a greater proportion of high-end properties were sold off-market and price reductions were rare.
Zoopla says the biggest discounts are on homes in London and the south-east of England. Despite a pickup in demand and sales heading into the typically busy September and October selling season, Zoopla expects home sales to hit 1 million by the end of the year, a fifth less than last year.
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