House prices continue to fall
Higher mortgage rates hitting demand, and more homes for supply boosting choice and negotiating power, have led to buyers securing an average of £18,000 off their home purchase, according to property listing platform Zoopla.
The discount to asking price for achieved sales is now at a five-year high and has grown to 5.5% for sales over the first half of November compared to an average discount of 3.4% average in the first six months of the year.
Meanwhile, the number of homes available for sale reached a six-year high with 34% more homes for sale now compared to a year ago. An average estate agency branch now has over 31 homes for sale, compared to a low of just 14 in the middle of the pandemic boom, offering more choice for potential buyers.
Results of the latest Zoopla House Price Index confirms the existence of a strong buyers’ market with annual house price inflation also falling to -1.2%, down from 8.2% a year ago.
Zoopla also noted that despite buyer demand remaining 13% lower than 2019, new sales are still being agreed with the total volume currently 15% higher than this time last year, and 5% up on 2019 levels. The market remains on track for a million sales completions in 2023.
“These are the best conditions for homebuyers for some years with more homes to choose from and with sellers more prepared to negotiate on price to agree a sale,” Richard Donnell, executive director at Zoopla, commented. “There is a growing acceptance that what a home might have been worth a year ago is now largely academic given current market conditions. Sellers have plenty of room to negotiate with average house prices still £41,350 higher than the start of the pandemic.
“It’s a positive sign that new sales continue to be agreed at a faster rate than a year ago and pre-pandemic. This indicates that house prices do not need to post bigger falls to get people moving, but sellers need to be ready for more negotiation on price. New sales will slow as we run up to Christmas and some sellers will take homes off the market ready to relaunch in the new year.”
Zoopla said it will remain a buyers’ market in 2024, with no rise in house prices anticipated any time soon. It added, however, that while five-year fixed mortgage rates have been falling below 5%, they need to fall further to bring more buyers back into the market.
If mortgage rates start to fall further, the property website said this would support an improvement in demand and sales volumes later in 2024, but prices will remain under modest downward pressure.
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