Homeowners now taking £14k discounts to sell their houses
Vendors are having to agree to discounts of an average of 4.5% of the asking price in order to complete the sale of their homes.
According to new data from property website Zoopla, that discount is the highest level seen in five years, and is the equivalent of around £14,100 on average.
The website notes that the typical UK home has grown in value by £42,000 since the onset of the pandemic, meaning vendors are having to sacrifice a third of that in order to sell their homes.
Zoopla’s research found that property supply is recovering to more usual levels, with the stock of homes for sale up by more than 60% compared with last year. It found that the average estate agent office now has 24 homes for sale, up from 15 a year ago. While demand has improved in the first two months of this year, it remains half the level seen a year ago.
The property portal pointed out that current market conditions are now more in line with those seen before the pandemic, with demand up by 8% and sales agreed up by 1% in the four weeks to 19 February compared with the same period between 2017 and 2019.
Looking at regional property prices, Zoopla found that annual house price growth ranges from 2.5% in London to 7.1% in Wales. It pointed to southern England as seeing a “real weakness” in house price inflation, noting that high house prices compound the impact of higher mortgage rates
Oldham was found to be the postal area with the strongest house price growth, having increased by 8.9% over the last year, just ahead of the 8.8% achieved by Wolverhampton and the 8.5% seen in Dudley.
At the other end of the scale, West Central London was the one postal area to see prices fall, dropping by 1.4%. It was followed by West London, with growth of 0.6%, and South West London at 1.3%.
The Zoopla report comes after the latest data from Rightmove found that asking prices were largely flat in February, increasing by just £14.
No crash but a soft landing
Richard Donnell, executive director at Zoopla, said that discounts were being accepted due to “greater realism” on the part of vendors, noting that they have more room to be flexible due to the “sizeable” house price gains made over the last few years.
He continued: “Discounts to asking price have widened and while 4% to 5% discounts are manageable, if these were to widen further then this would point to a greater likelihood of larger house price falls. We believe the market remains on track for a soft landing in 2023 with modest price falls of up to 5% and one million housing sales.”
Nathan Emerson, CEO of Propertymark, pointed out that estate agents have seen a lot of new property “appearing” of late, demonstrating a healthy appetite among vendors to get moving even if doing so will mean a lower sales price than might have been achieved last year.
He continued: “We are most definitely out of the sellers’ market where they could be ambitious about the value they could achieve, but prices got to a pressure point that couldn’t be sustained, the cooling we are seeing now is a natural curve that needed to happen.”