Brokers explain what they are seeing the market
Asking prices in August fell by their sharpest margin since 2018, dropping 1.9%, the equivalent of £7,012, to £364,895, according to Rightmove.
Yet while many sellers are adjusting to the current housing market conditions, speaking to news agency, Newspage, a number of brokers believe the refusal of others to lower their asking price is being driven by financial necessity rather than stubbornness.
Why sellers won’t lower house prices
Ranald Mitchell, director at Charwin Private Clients, said that some sellers are simply not in a position to accept reduced offers, with debt secured to the hilt on their properties.
“Many people have built a lifestyle based on ultra-low rates and, as a result, they are now in a corner,” he said.
Clive Read, owner at Goldmanread, agreed with Mitchell, and added that British households have taken on unprecedented levels of household debt while interest rates remained so low.
“For some sellers, the only way out of this debt trap is achieving a certain price level for their house, which they may be unable to deviate too far from,” he said.
However, Read said the market may continue to fall and buyers know this, so he believes the issue for sellers is that if they price too high, they will remain unsold as prices potentially slide.
Darryl Dhoffer, mortgage expert at The Mortgage Expert, said sellers can mitigate the impact of reduced sales prices by negotiating hard on their next property.
“For the home-movers out there, this is all relative, so a sensible selling price means they can also negotiate a sensible purchasing price, and I would highly recommend working with reputable agents that understand this process,” he said.
Playing hardball
Samuel Mather-Holgate, independent financial adviser at Mather and Murray Financial, said with rates still rising, the housing market was always going to retreat.
“The Rightmove data could be the first in a list of bad news for the market; if rates remain high for a sustained period, we could see falls of 20% as buyers demand cheaper prices as finance is more expensive,” he said.
Mather-Holgate added that there is a lot of property hanging around on portals, as sellers do not want to budge on prices. Those that price competitively, he said, are more likely to sell their homes quickly and without needing to reduce and without getting involved in a protracted negotiation.
“Sellers who find it difficult to adjust expectations downwards could see a more negative outcome overall,” Mather-Holgate added.
Justin Moy (pictured), managing director at EHF Mortgages, said that finally the data is starting to catch up with the current market trends.
“Many sellers are still holding out for high prices that are not achievable - buyers are not able to afford the higher rates and their borrowing capacity is truncated, too,” Moy said.
The only outcome, Moy believes, will be lower prices in the short term, but if prices are realistic to start with, he said there are still first-time buyers willing to get on the property ladder.
“We have continued to see some good levels of enquiries, especially in areas where rent costs on equivalent properties remain high,” he said.
Riz Malik, founder and director at R3 Mortgages, agreed with Moy and Mather-Holgate that sellers need to understand they do not hold the cards in this market. He added that even properties that have sales agreed are popping back up on the market for one reason or another.
“Those who do not price according to the current market are going to be tomorrow’s stale listing, and you want to avoid that at all cost,” he said.
Why do you believe some sellers are not budging on price? Let us know in the comment section below.
