Sellers have been listing properties at lower than usual prices during December in an attempt to attract buyers amid the busy festive season, Rightmove data reveals.
December is usually a quieter month for property listings as the cold weather and focus on Christmas reduces demand.
But figures from the property website show average asking prices dipped by £7,000 or 1.9% at the start of this month - historically higher than the 20-year average of 1.5%.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
This follows a £6,000 fall in property asking prices in November.
December’s drop means national average asking prices are 1.1% below this time last year, as sellers drop their prices to undercut their competition and boost buyer interest.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “These figures are not particularly surprising bearing in mind they reflect asking rather than sale prices and a degree of realism on the part of sellers who are reducing their aspirations if they really want to attract buyers.”
2023 property seller’s market remained resilient
According to Rightmove, even though average asking prices have fallen compared with this time last year, property sales are only 13% lower than the same period in 2022.
Tim Bannister, Rightmove’s director of property science believes this is a “better-than-expected figure given that the 2022 market was much more frenetic, and three of the ten strongest months on record for buyer demand occurred in the first half of that year.”
Leaf says “weaker demand and higher base rates” have driven sales agreed down.
“However, recent reductions in mortgage rates, and inflation not rising quite as rapidly, has given the market a bit of a kick when needed,” Leaf adds.
Mortgage rates have dropped for 19 consecutive weeks, with the average 5-year fixed mortgage rate now standing at 5.11%, according to Rightmove.
Plus, inflation figures have fallen sharply to the lowest level since 2021, suggesting that cost of living pressures will ease for households, which could improve buyer affordability.
What will happen to property asking prices in 2024?
Rightmove predicts that new seller property asking prices will drop by an average 1% in 2024 as it says “there are signs of greater activity from family movers who had put their plans on hold during the fallout from the mini-Budget.”
This is due to experts predicting a more stable mortgage market. But Bannister says we shouldn’t disregard the impact of interest rates moving into the new year, as “interest rates are likely to remain elevated next year, continuing to put pressure on buyer affordability.”
Plus, uncertainty in some areas will continue in 2024 as a general election is on the cards in 2024.
Bannister advises “both buyers and sellers to be realistic with expectations, it is potentially an easier market for buyers in prime areas with more choice and less pressure. Vendors; get organised, take early interest seriously and above all pitch values at an attractive level from the outset.”
