Homes are selling for three per cent below asking prices, according to Zoopla
(Picture: Daniel Lynch)One in four London homes for sale has fallen in price over the past three months, research has revealed.
As many as 25 per cent of property sale listings on Zoopla had had their asking price slashed since September 1 this year.
The data represents one of the first clear signs that economic and political uncertainty have filtered down into the housing market on the ground.
Some asking prices have dropped by more than 10 per cent in the last three months, Zoopla found, while more than one in 10 homes for sale in the capital has come down in cost by more than five per cent.
"London’s housing market has lagged the rest of the UK over the pandemic as working from home, slower employment growth and less inward migration have kept demand in check,” said Richard Donnell, Zoopla’s research director.
“Asking price adjustments for homes in London are more severe than a year ago as 25 per cent of homes in London have had a reduction in asking price as mortgage rates hit buying power.
“Over 13 per cent of homes for sale have seen a reduction of five per cent or more, up from less than nine per cent a year ago."
Dominic Agace, chief executive of estate agents Winkworth said the numbers "reflect a market change”.
“When growth stops, asking prices come down, although that doesn’t mean the final selling prices are down,” he said.
"It also reflects a new realism, moving away from recent times when records were being set on a monthly basis to a market where prices today are the same as last month. Therefore, asking prices are being adjusted.”
There was also a traditional lull in the housing market in the run up to Christmas, Agace added, leading sellers to slash prices in a bid to sell before the festive break.
Where are house prices falling fastest?
Across the UK homes have been selling for three per cent below their asking price typically.
For much of 2021 and the first half of 2022, the average discount that homes were selling for was zero per cent, it said, meaning that properties were typically achieving their asking price.
The property website said it expects discounts to increase further in 2023.
Asking price reductions are greatest in southern England, where sales volumes have fallen the most, with almost one in three homes in the South East and east of England reducing asking prices to attract more demand, the report said.
Its latest housing market report said: “History shows that when discounts reach five to six per cent this points to flat to falling prices.
“It’s important sellers who want to achieve a sale are realistic on selling prices and speak to agents for the right advice for their home.”
Zoopla said falling demand and sales mean current sellers are having to set asking prices at more realistic levels to secure buyer interest.
Since the start of September, one in nine (11 per cent) of homes have had their original asking price reduced by five per cent or more, Zoopla said, and a quarter (25 per cent) have had the price cut by any size, according to the index covering the month of October.
Zoopla said the outlook for mortgage rates is the most important factor for home buyers and those planning to move in 2023.
Looking ahead, Zoopla expects sales volumes to drop back to one million over 2023, from 1.3 million in 2022, with house price falls of up to five per cent, concentrated in the markets most sensitive to higher borrowing costs.
Richard Donnell, 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.”
He added: “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.”
Sharing tips for sellers looking to list their home for sale, Polly Ogden Duffy, managing director at John D Wood & Co said: “If your property comes with a compromise, such as having a small garden, it’s on a busy road, or it requires a replacement kitchen or bathroom — you need to price accordingly.
“Competing with other properties at the same price point that come without these drawbacks, will only mean that yours will be last to sell.
“A combination of waiting too long to adjust your price, and more property coming to the market in the New Year will only provide even more choice for buyers.”
