House buyers who held off on purchasing because of the mini Budget are expected to go forward with plans next year as sellers reduce asking prices by one per cent, it has been predicted.
Rightmove has predicted that by the end of 2024, new seller asking prices will decline as the market returns to pre-pandemic levels.
It said the average time to find a buyer had increased from 45 days last year to 66 days currently, with sellers who priced more competitively finding more success. Rightmove said sellers who are under pressure to find a buyer will lower their asking price.
The firm said the level of price reductions had increased over the year, with 39% of properties being reduced compared to 29% last year and 34% in 2019.
Rightmove said the first-time buyer market had been hit by higher mortgage rates and in 2024, there would be an effort to attract this segment of the market. Rightmove said its agents suggested this would be necessary “for the bottom end of chains in 2024 to help build longer chains, create more sales, and keep transactions moving”.
Lower rates and greater choice
Rightmove said mortgage rates would continue to fall as they had done since July, which would offer more stability and certainty to buyers. However, it said with the Bank of England saying that a reduction to the base rate would not happen straight away and mortgage rates expected to remain relatively high, “some buyers’ spending power will remain limited”.
Rightmove said currently, the average two-year fixed rate is 5.52% and the average five-year fixed rate is 5.11%.
It also noted that there would be a wider choice of properties in 2024 and buyers would be in a “strong position” to negotiate on price and take time to choose the right home.
The firm said the number of available homes had only just returned to pre-pandemic levels and there were no signs that a wave of more homes would be coming to market.
Rightmove said this would “create a glut of homes for sale”. It added: “With more choice and fewer buyers on the ground, it will be those sellers who are willing and able to price temptingly who will attract buyer’s attention”.
A better year than expected
Tim Bannister, property expert at Rightmove, said: “This year has been better than many predicted, with no significant signs of forced sellers, lower than expected price falls, and good buyer demand for the right-priced quality properties. However, it has been a challenging change in mindset for some sellers to transition from the frenzied market of the previous few years.
“The level of sales being agreed is 10% lower than at this time in the more normal market of 2019, so sellers will need to price even more competitively next year to make sure that they secure a buyer.”
Bannister said the drop in asking prices would be more noticeable in some areas than others, and areas where sellers need to attract “affordability-stretched buyers” or sell quickly will see more competitive pricing.
He added: “An average drop of one per cent in prices reflects our prediction that it’s likely to be another muted, and in parts challenging, year for some buyers and sellers in 2024. However, the better than anticipated activity this year has shown that many buyers are still getting on with satisfying their housing needs, and there is considerable opportunity for sellers and their agents to attract these buyers with the right pricing and marketing strategy.
“This underlying level of good demand at the right price makes it unlikely that we will see a more significant drop in prices next year.”