RICS data shows majority of homes are being sold below original listing price
In RICS latest Residential Market Survey, it found for house prices up to £500,000, 60% are being agreed below asking price, and for homes between £500,000 and £1 million, the figure rose to 70%.
Scott Taylor-Barr (pictured), financial adviser at Carl Summers Financial Services, said the RICS data matches what he is seeing at present in the market, and added that most people are agreeing sale prices for less than the price the property was originally marketed at.
However, he believes this change is in fact simply a return to normal, rather than a shift in the way the property market generally works.
Developing market
For the last couple of years, Taylor-Barr said the industry has witnessed a market overheating with over-asking price offers very much the norm.
“As more people are recalled to the office, the end of support schemes such as the Help-to-Buy equity loan and the general downturn in the economy, the competition for houses has reduced and so things are looking a lot more like the pre-pandemic housing market; which for many, is no bad thing,” he said.
Data from House Buyer Bureau has revealed that as many as one in 10 sellers are reducing their asking prices within 30 days of entering the market in order to increase their chances of attracting a buyer.
Chris Hodgkinson, managing director of House Buyer Bureau, said many sellers may still be acting with a degree of over optimism when entering the market, and this is forcing them to have an almost immediate rethink where their asking price expectations are concerned.
“In recent months, a higher level of market uncertainty has left many sellers finding their onward purchases in jeopardy,” he noted.
Hodgkinson said that a contributor to sellers quickly reducing their original asking prices is the current economic outlook, with a number lowering their asking price to avoid the buyer withdrawing due to the increased cost of borrowing.
House prices
Samuel Mather-Holgate, independent financial adviser at Mather and Murray Financial, believes the latest RICS data is an indication house prices are, in fact, falling.
Mather-Holgate added that although buyers are not being realistic with asking prices initially, it is clear from the data that they are willing to offer discounts.
“Prices still have further to fall, and even when the central bank starts cutting rates in the summer, it will not stop the crash,” he said.
Mather-Holgate believes that house prices will bottom out around the winter, at least 10% below where they are now.
Graham Cox, director at Self Employed Mortgage Hub, said that prices are being agreed below asking for no other reason than borrowers are unable to borrow as much as they once could.
“Unless you are lucky enough to attract a cash buyer, house prices are determined by the affordability of credit,” he said.
Cox is expecting the rate of house price falls to accelerate over the next three months as more vendors market their properties, including some distressed sellers.
“I think we will see monthly house price falls of between 1% and 2% in the near term future,” Cox said.
What impact do you believe homes being sold under the original asking price will have on the market? Let us know in the comment section below.
