11:15 AM, 28th November 2022, About 2 years ago
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Since September, 10% of homes for sale have had a price reduction of 5%, as buyer demand slumps by 44%, Zoopla reveals.
The property platform also highlights that nearly a third of homes in the South East and East of England – outside of London – have seen asking prices being reduced to attract more demand.
It says that the country’s hottest markets have seen the biggest drop in sales volumes – by up to 50% – with property sales being agreed by those who still have low-rate mortgage offers.
Zoopla also says that the UK’s current house price inflation has slowed to 7.8%, that’s the slowest rate of growth recorded since November 2021, following October’s mini-Budget which then saw the property market stall.
The platform adds that it appears the housing market is transitioning from an unsustainably strong market to one more balanced – nut one with affordability challenges for homebuyers who rely on mortgage finance.
Zoopla is also predicting that mortgage rates will start 2023 at 5%.
The figures also show that more homes are coming to the market for sale with the total stock of homes available up 40% vs 2021 – but still almost 20% below pre-pandemic levels.
But sellers are now having to accept discounts to their asking prices to achieve a sale – a trend that has become more apparent in recent weeks.
Richard Donnell, the executive director at Zoopla said: “The housing market is adjusting to a reset in the level of mortgage rates but the likelihood of double digit house price falls at a UK level remains low.
“While the outlook for house prices is weak, we see a shift to more needs driven motivations to move in 2023 and beyond which will support sales volumes.
“Ongoing pandemic impacts, increased labour market flexibility plus more retirement will continue to encourage moves.”
He added: “Cost of living pressures will compound these trends encouraging homeowners to consider their next move.
“The rapid growth in rents, which shows little signs of slowing, will add to cost-of-living pressures and add continued impetus to first time buyer demand.”
Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, said: “Hikes in mortgage rates mean runaway house prices have given way to runaway buyers.
“Demand has plummeted by almost half since the mini-Budget, and one in four sellers are being forced to cut their prices. And this is just the beginning.”
She added: “On the face of it, house price growth is still 7.8% over the past year, which seems relatively healthy, and Zoopla says it’s not seeing price falls in any area.
“However, over the past three months, prices are up less than 1%, and all the signs point to a market that’s starting to struggle.”
Ms Coles continued: “Demand has collapsed since the mini-Budget unleashed chaos on the mortgage market.
“Meanwhile sales are down – in some areas as much as 50%.
“Even once a sale is agreed, the proportion of sales that fall apart during the buying process is rising – and has hit 15%.”
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