UK property hunters are paying an average of £18,000 less than asking price, according to new data, as mortgage rates hit demand and an increase in supply bolsters negotiating power for house hunters.
This rate of discount to asking price is now at a five-year high, hitting 5.5% for sales in the first half of November compared to a 3.4% average discount for the first six months of 2023, according to Zoopla's monthly House Price Index.
This is being keenly felt in the south of England where the average discount to the asking price for sales is 6.1% in London and the South East – equating to a total reduction of £25,000 off the asking price, the monitor found.
“These are the best conditions for home buyers for some years with more homes to choose from and with sellers more prepared to negotiate on price to agree a sale," said Richard Donnell, executive director at Zoopla. "There is a growing acceptance that what a home might have been worth a year ago is now largely academic given current market conditions. Sellers have plenty of room to negotiate with average house prices still £41,350 higher than the start of the pandemic."
Despite buyer demand remaining 13% lower than 2019, new sales are still being agreed with the total volume currently 15% higher than this time last year, and 5% up on 2019 levels. This indicates greater realism on the part of sellers and a growing sense among would-be movers that mortgage rates may have peaked and could start to fall later in 2024.
The market remains on track for one million sales completions in 2023, with sales holding up across many parts of Scotland and inner London where market activity has underperformed the rest of the UK over recent years.
In a coup for buyers, the number of homes available for sale reached a six-year high with 34% more homes for sale now compared to a year ago. This means that the average estate agency branch now has over 31 homes for sale, compared to a low of just 14 in the middle of the pandemic boom, offering more choice for potential buyers. As a result, increased supply boosts choice for buyers but is likely to keep prices under downward pressure as price sensitive buyers continue to negotiate.
This rebound in supply has been recorded in the market for three and four-bed family homes – a trend seen across all parts of the UK. Only Scotland, the North-East and North-West have less supply than their pre pandemic levels.
"It’s a positive sign that new sales continue to be agreed at a faster rate than a year ago and pre-pandemic," said Donnell. "This indicates that house prices do not need to post bigger falls to get people moving but sellers need to be ready for more negotiation on price. New sales will slow as we run up to Christmas and some sellers will take homes off the market ready to relaunch in the new year."