Home sellers face drastic price cuts to attract buyers

Homebuyers are successfully negotiating lower prices for homes with a whopping 42% of sellers agreeing to discounts of more than 5% on the asking price, research reveals.

And, according to Zoopla, 15% of sellers are accepting offers of at least 10% off their asking price.

Also, the UK’s annual house price growth has dipped to 1.2% – after a brief positive spike during spring due to increased sales activity.

Despite the slowdown in price growth, the number of sales agreed upon in the first five months of 2023 remains consistent with the last five years.

And the average discount to the asking price has risen to 3.8%, indicating that buyers in the market are driving harder bargains than before.

‘Resilience of the housing market and homebuyers is set to be tested’

Richard Donnell, an executive director at Zoopla, said: “The resilience of the housing market and homebuyers is set to be tested once again as mortgage rates increase over 5%.

“Modest price falls will resume in the second half of 2023 as the supply of homes increases giving buyers more choice and room for negotiation on price.

“We still expect house prices to be 5% lower over 2023 and there is a very substantial equity buffer to absorb price falls which are likely to be concentrated across southern England.”

Mr Donnell says that home sellers need to be ‘realistic on pricing’ and ask agents what the best price should be.

Mortgage rates have impacted a buyer’s purchasing power

The data also shows that higher mortgage rates have impacted a buyer’s purchasing power, with a 10-20% reduction compared to when mortgage rates were at 4%.

The property platform says this could be one of the factors contributing to the increase in negotiated discounts.

And as prices decline for the rest of the year, Zoopla says homebuyers will gain more bargaining power to negotiate a discount.

‘Mortgage misery throws houses into the bargain bucket’

Sarah Coles, the head of personal finance at Hargreaves Lansdown said: “We could be piling properties high and selling them cheap in the second half of the year, as mortgage misery throws houses into the bargain bucket.

“Two in five sellers have had to accept an offer that’s at least 5% below the asking price to secure a sale, while an alarming 15% have had to accept a 10% discount – or more.

“And if rates stay higher for longer, this could just be the start of it.”

She added: “A huge number of today’s buyers will have locked in a mortgage before rates started to rise through the roof.

“As a result, sales held up at 8% above the five-year average. However, demand is already down 14% in a year, and as the impact of mortgage rate hikes feeds through into sales, we can expect this to intensify.”

‘Many buyers paused to reassess their options’

Matt Thompson, the head of sales at Chestertons, said: “In London, many buyers paused to reassess their options at the end of last year and have sat on their hands while watching what the market does.

“Although interest rates have continued to rise, there has not been the big price correction that many commentators forecast, and we are now seeing cautious confidence returning to the market with more buyers offering on properties and more sellers coming to the market.”

Chestertons says that while the market has been slightly slower than last year, activity is picking back up, resulting in 5% more properties coming onto the market and 3% more buyer enquiries in May compared to April.

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