Agents have been urged to price realistically as Rightmove revealed data showing the impact of asking price reductions.
Tim Bannister, director of property science for the portal, unveiled research at the Propertymark One conference in Wembley Arena yesterday that he said underlined the importance of sellers and agents being realistic. The analysis looked at properties coming on to the site between January 2017 and November 2022.
It found that properties are 10% less likely to go under offer if there is a price reduction, while time on the market is more than double where there is a change. The likelihood of a fall-through is also almost double if there has been a reduction. The research also showed that properties are 1.5 to two times more likely to be lost to a competitor if there is a reduction.
The analysis also showed that the reduction rate grows if a property doesn’t get an email enquirty in the first week, with 56% of listings usually getting at least one. Bannister added that all these factors relate to the pricing strategy from day one. He said "the market is facing challenges from higher mortgage rates and inflation but said Rightmove is sticking to its forecast of a 2% decline in house prices this year."
Large asking price discounts hit three-year high - Zoopla
The level of sellers accepting an asking price discount of 5% or more has hit a three-year high. Zoopla’s latest House Price Index has revealed 42% of sellers have accepted discounts of 5% or more off the asking price to achieve a sale - the highest level since 2018.
Higher mortgage rates have also delivered a further hit to buying power - fortifying the buyers’ market for the remainder of 2023, the portal said. Another 15% are accepting discounts of over 10% off the initial asking price, according to Zoopa’s report.
The average discount to asking price has increased to 3.8% The research highlights that mortgage rates tipping above 5% have delivered a further 10-20% hit to the buying power of those who are purchasing with finance.
Mortgage rates moving from 4% to 5% results in an 11% reduction in buying power. However, this increases to 20% with mortgage rates at 6%, up from 4%. This appears to be hitting demand, with 14% fewer buyers in the market over four weeks to 22 June compared with a year ago. However, those that remain appear committed to moving home with sales agreed running 8% above the five-year average, the main risk to house price growth, aside from a weakening economy, is a sudden surge in the supply of homes for sale, Zoopla said.
There are some signs that supply is starting to grow at an above-average rate with 18% more homes listed for sale in the past four weeks compared with the five-year average.
This shouldn’t be compounded by forced sales, Zoopla claims, as it suggests this will be limited thanks to support measures by the Government for existing mortgage holders. An increase in supply would boost choice for buyers and give them more room to negotiate - while also driving larger house price falls, the research warns.
The report revealed that average annual house price growth has slowed from 9.7% in May 2022 to 1.2% last month, putting typical prices at £261,100.
In terms of the outlook for house price growth, Zoopla still anticipates price falls of up to 5% this year – adding that much depends on mortgage rates and inflation. Long-term, the property website said, house price growth is anticipated to be a lot weaker “as we see a steady realignment of house prices and household incomes over the next three to five years.
Richard Donnell, executive director at Zoopla said “the resilience of the housing market and homebuyers is set to be tested once again as mortgage rates increase over 5%. Mortgage rates falling to 4% earlier this year supported a rebound in sales and led to house prices registering small month-on-month gains. Modest price falls will resume in the second half of 2023 as the supply of homes increases giving buyers more choice and room for negotiation on price. We still expect house prices to be 5% lower over 2023 and there is a very substantial equity buffer to absorb price falls which are likely to be concentrated across southern England. Demand for homes remains but those households looking to move home in 2023 need to be very realistic on pricing and get the view of agents on where to pitch their asking price to secure a sale.”
Property listings soar amid stagnant market
The number of houses on sale in England has rocketed by 15% since the start of the year as sellers struggle to find buyers, a study reveals.
According to the House Buyer Bureau, the oversaturated market has 720,540 properties currently listed for sale. That’s an annual growth of 9% and a 15% rise from the beginning of 2023.
‘The level of available for sale stock climb’
Chris Hodgkinson, the managing director of House Buyer Bureau said “buyers are acting with far less enthusiasm and, as a result, homes are taking longer to sell, or attracting little to no attention whatsoever. This has inevitably led to an oversaturation of for sale stock and this will naturally cause a further reduction in property values as the bidding wars of the pandemic boom fade into memory. So, while this may be good news for the nation’s buyers, those looking to sell are facing a far tougher challenge. Many are unwilling to adjust their price expectations, but this is the reality they face if they want to sell their home quickly and before any further dent to property values materialises.”
Number of properties listed for sale
Rutland stands out as the county with the most bloated property market this year, with a striking 26% surge in the number of properties for sale.
Similarly, Herefordshire also experienced a sizeable increase of 22%, while Wiltshire, Dorset and Somerset’s property listings grew by more than 20%. Other counties witnessing considerable increases include Cumbria, Oxfordshire, Devon, Surrey and Worcestershire, each recording an increase of around 18-19%.
Comparing year-on-year data, the Isle of Wight steals the show with a 27% spike in property listings compared to the hotter market conditions seen last year. However, not all regions follow this trend as Bristol has seen a decrease in the number of homes for sale.
The House Buyer Bureau says the market there has seen a 9% drop since the start of this year and a significant 21% dip compared to the second quarter of 2022.