According to data from property platform Zoopla, UK house sellers are reducing prices in order to secure deals during the typically busy autumn selling season. Over the past four weeks, discounts have increased to 4.2% from the original asking price, averaging £12,125, which is the highest level since March 2019. This trend coincides with the Bank of England’s decision to pause interest rate increases. While stable borrowing costs are a relief for the property market, analysts suggest that further declines in house prices will be necessary before market activity fully recovers.
The mismatch between sellers’ expectations and buyers’ willingness to pay is contributing to the increased price reductions. Mortgage lenders have cut their rates over the summer, making it more affordable for buyers. Nevertheless, Capital Economics predicts that borrowing costs will remain relatively high and house prices will continue to fall until mid-2024, with a projected drop of around 10% from the peak in August 2022. In August this year, house prices fell by 4.6%, the largest decline since 2009, according to Halifax.
Zoopla’s research director, Richard Donnell, states that it remains a buyer’s market, with buyers negotiating larger discounts from the asking price. One in three homes that were sold had their prices reduced, with one in ten experiencing a price drop of more than 10% before finding a buyer. While properties that receive immediate interest might not require price cuts, those that don’t are more likely to undergo reductions. London and the south-east of England saw the greatest discounts, and although demand and sales are picking up for the busy September and October selling season, Zoopla expects the number of house sales to decrease by a fifth compared to last year, ending the year at 1 million.