Homeowners are having to settle for offers below their asking price as the UK housing market continues to slump.
Property website Zoopla predicts that house prices will fall by approximately 5% next year, with the average price agreed in recent weeks dipping 3% below the original prices set by sellers. Zoopla added that throughout most of 2021 into the beginning of 2022, agreed sales mostly matched asking prices.
Increasing Numbers of Sold Subject to Contract (SSTC) Homes Returning to The Market – Zoopla
One in 15 homes formerly sold by agents are returning to the market after the original sale collapsed, new data shows.
Analysis by Zoopla has highlighted what it describes as a housing market shake-out rather than a crash with a rise in fall-throughs and widespread repricing amid the cost of living crisis and higher mortgage rates.
Zoopla warned that all the leading supply and demand indicators it measures point to a “rapid slowdown from very strong market conditions.”
Demand since the mini-Budget is down 44% with sales 28% lower than a year ago
Its analysis found that fall-through rates are higher but “not unmanageable for agents.”
Asking price reductions to have also jumped over the autumn but remains below 2018 levels, Zoopla said.
One in four homes for sale since 1 September have experienced a price reduction of any size, according to the research, with 11% recording a cut of more than 5%.
Price reductions have been greatest in southern England, where sales activity has fallen back the most.
The Southeast and East of England regions have seen almost one in three homes for sale have their asking price reduced in the hope of attracting more buyer interest.
Weaker sales and more homes coming to the market – up 40% annually in the four weeks to 20 November – has, however, meant that the stock of homes for sale continues to rebuild off a low base.
Zoopla said the average estate agency office now has 23 homes for sale. This is the highest since January 2021 but almost a fifth lower than pre-pandemic levels
Sellers are now having to accept discounts to asking prices in order to achieve a sale – a trend that has become more apparent in recent weeks, Zoopla said.
The average price achieved in recent weeks has been 3% below asking price when for much of 2021 and the first half of 2022 it has been 0%.
Zoopla said it expects discounts to widen further in 2023, adding: “History shows that when discounts reach 5-6% this points to flat to falling prices. It’s important sellers who want to achieve a sale are realistic on selling prices and speak to agents for the right advice for their home. “
This has contributed to house price growth slowing to the lowest level since November 2021 at 7.8% to £261,600.
The portal said its expectations for 2023 remain the same, with headline house price falls of up to 5%, concentrated in the high-value markets that are most sensitive to higher borrowing costs.
It is also expecting a decline in sales volumes over 2023 to 1m.
Richard Donnell, executive director of Zoopla, said: “The housing market is adjusting to a reset in the level of mortgage rates but the likelihood of double digit house price falls at a UK level remains low.
“While the outlook for house prices is weak, we see a shift to more needs driven motivations to move in 2023 and beyond which will support sales volumes. Ongoing pandemic impacts, increased labour market flexibility plus more retirement will continue to encourage moves.
“Cost of living pressures will compound these trends encouraging homeowners to consider their next move. The rapid growth in rents, which shows little signs of slowing, will add to cost-of-living pressures and add continued impetus to first time buyer demand.”