Homeowners are having to settle for offers below their asking price as the UK housing market continues to slump.
Property website Zoopla predicts that house prices will fall by approximately 5% next year, with the average price agreed in recent weeks dipping 3% below the original prices set by sellers. Zoopla added that throughout most of 2021 into the beginning of 2022, agreed sales mostly matched asking prices.
However, since the start of September, one in nine homes have had their first asking prices reduced by 5% or more, the Guardian reports, with a quarter having their price slashed to some degree. The greatest reduction in asking price has been seen in southern England, where sales have also seen the greatest decline. Almost one in three homes in the south-east and east of England have had their asking prices reduced to attract prospective buyers.
Annual house price growth dropped to 7.8% last month, down from 8.1% in September. It is currently at its lowest ebb since November 2021, according to Zoopla. Buyer demand has fallen by 44% since September's mini-budget, which triggered a sudden spike in mortgage rates and led to many borrowing deals being pulled from the market.
Zoopla described current market trends as a “shake-out rather than a pre-cursor to a housing crash” and said the mini budget had “delivered a shock” to buyers and sellers.
Sales haven't fallen so much in more affordable areas of London, where the market conditions were weaker. However, hotspots such as southern England, east Midlands and Wales have been hit much harder, with a 50% drop in new sales.
Meanwhile, more homes are being put on the market, with the total number up 40% from this time last year but still almost 20% below pre-pandemic levels. Experts believe the continued cost-of-living crisis combined with the Bank of England's prediction of an enduring recession is likely to cause the housing market to slow even further, with prices predicted to dip in the first half of 2023.
Richard Donnell, executive director at Zoopla, told the Guardian the housing market was "adjusting to a reset in the level of mortgage rates" but argued that the chances of a double-digit house price decline in the UK "remains low".
The Office for Budget Responsibility said it expects house prices to drop 1.2% next year and a further 5.7% in 2024.
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