The housing market is swinging in buyers’ favour, Zoopla’s latest house price index shows, with the asking price for newly agreed sales averaging £12,125 below the original asking price.
There are also 80% more homes available for sale compared to September, the house price index showed.
Properties are selling at a discount of 4.2% compared to asking price, but the number is heavily skewed by London and the South East where discounts are 4.8%. For the rest of the UK discounts stand at a more modest 2.8%.
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Earlier this month Rightmove reported similar findings, stating house prices were being cut at their fastest rate in over ten years.
Buyer demand improves as mortgage rates fall
UK mortgage rates have been falling as markets no longer expect the Bank of England to hike rates much further.
This means the decline in buyer demand the market saw over the summer has started to reverse. While it is “partly seasonal” it “also reflects improved consumer confidence, which is at a two-year high, and homeowner expectations of lower mortgage rates which are currently on track to fall below 5%” the report said,
“The closer rates get to 4%, the more buyers will come back into the market - further supporting demand and sales agreed.”
Additionally despite higher mortgage rates’ impact on affordability – rates of 5% equal a 20% reduction to purchasing power, Zoopla said – buyers are refusing to compromise on the type of home they’re after, with most buyers still after 3-bed properties.
Where next for the property market?
“The housing market continues to adjust to a higher mortgage rate environment,” said Richard Donnell, executive director at Zoopla. “Better news on inflation and the end of base rate increases has provided scope for lenders to start reducing mortgage rates which has supported a modest uptick in demand for homes this September. “
But Zoopla still expects prices will end the year 2 to 3% lower than they were at the beginning.
Despite that it’s worth noting the average house is still 17% more expensive than it was in 2020, Donnell adds, as the pandemic significantly boosted house prices.
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