Home buyer demand has collapsed since last January as the effects of soaring mortgage rates bite and would-be purchasers wait for house price falls.
Agreed sales in the week to January 22 were down by nearly a quarter year-on-year, as the pandemic property boom grinds to a halt, according to property website Zoopla. This was a drop of a fifth compared to the five-year average, although levels were still higher than the same period in 2019.
The average seller must now cut their asking price by between 3pc and 4pc to achieve a sale.
Annual house price growth slowed to 6.5pc, down from 8.3pc at the end of last year.
Zoopla found that supply is rising: the average estate agent now has 23 properties for sale, up from a low of 14 at the start of 2022. This number is likely to climb further as high running costs and rising pressures on incomes encourage people to move house and put more pressure on older homeowners to downsize.
Richard Donnell, of Zoopla, said: “A proportion of existing homeowners are holding back waiting to see if sizeable price falls materialise and how far mortgage rates fall back before entering the market.”
Demand is likely to rise in the coming weeks, but sellers need to adjust their expectations, Mr Donnell said. “Anyone serious about selling needs to be realistic on the asking price and needs to ensure this is in line with what buyers are prepared to pay.”
Tom Ashwood, of Tom Ashwood Real Estate, a London agency, said: “It is apparent that a large portion of our buyers are not prepared to risk overspending and therefore have reduced budgets accordingly.”
He added: “Undoubtedly you will see more and more reduced properties at the back end of Q1 heading into Q2.”
As affordability pressures bite, buyer demand is shifting to flats from houses. Zoopla data shows 27pc of new buyers are looking for one- or two-bedroom flats, up from 22pc a year ago.
Demand for three-bedroom houses, by contrast, has fallen by three percentage points to 39pc.