Research has shown that the average price of one in four London homes has dropped in the last three months.
Zoopla has seen 25 percent of the property sales listings have had their asking prices lowered since September 1, this year.
This data is one of the first signs that political and economic uncertainty has filtered down to the housing market.
Zoopla discovered that some asking prices have fallen by more 10 percent in the past three months. However, more than one-tenth of homes in capital have seen their costs drop by more five percent.
Richard Donnell, Zoopla research director, stated that London’s housing market is behind the rest of the UK because of the pandemic. He said that working from home, slower employment growth, and lower inward migration have all kept demand in check.
“As mortgage rates rise, asking prices for London homes have been reduced by 25%. This is a significant increase in the severity of asking price adjustments.
“Over 13% of homes on sale saw a decrease of five percent or more, up from less that nine percent a year ago.”
Dominic Agace, chief executive officer of Winkworth estate agents, said that the numbers “reflect market changes”.
He stated that asking prices fall when growth slows, but it doesn’t necessarily mean final selling prices are lower.
It also reflects a new reality, moving away form recent times where records were set on a monthly basis to an market where prices today are the exact same as they were last month. Accordingly, asking prices are being adjusted.”
Agace also noted that there was a traditional slowdown in the housing market leading to sellers cutting prices to try to sell before Christmas.
Which area are house prices dropping the fastest?
In the UK homes are selling at three percent below their asking prices.
It stated that the average discount homes sold for in 2021 and 2022 was zero percent, which meant that properties were often selling at their asking price.
According to the property website, discounts will increase in 2023.
The report found that asking price reductions are most common in southern England. This is because sales volumes have dropped the most. Nearly three out of every three homes in South East England and the South East of England reduced their asking prices to attract more customers.
According to its latest housing market report, “History has shown that discounts of five to six percent can lead to flattening or falling prices.”
It is important that sellers who wish to sell their homes are realistic about selling prices. They should also consult agents to get the best advice.
Zoopla stated that falling sales and demand means current sellers have to set realistic asking prices to attract buyers.
One in nine homes (11%) have seen their asking price drop by more than 5% since September. A quarter of homes (25%) have seen the price decrease by any amount, according to Zoopla’s October index.
Zoopla stated that the outlook for mortgage rates was the most important factor to home buyers and people who plan on moving in 2023.
Zoopla anticipates that sales volumes will drop to one million by 2023 from 1.3million in 2022. There will be a sharp decrease in house prices, which could lead to a fall of up to 5% in the most vulnerable markets to rising borrowing costs.
Zoopla’s executive director Richard Donnell stated that the market for housing is adjusting to a reset of mortgage rates, but the likelihood of double digit house prices at a UK level is low.
“While house prices are not expected to rise, we expect a shift in motivations that will drive people to move in 2023 or beyond. This will help to increase sales volumes.”
He said, “The rapid rise in rents, with little signs of slowing down, will increase cost-of-living pressures as well as provide continued impetus for first-time buyers’ demand.”
Polly Ogden Duffy is John D Wood & Co’s managing director. She shared some tips for sellers who are looking to sell their home.
“Competing against other properties of the same price, but without these drawbacks will only result in yours being last to sell.
“A combination of waiting too much to adjust your price and more properties coming on the market in New Year will only increase the number of buyers.”
