The UK housing market is currently experiencing a significant shift, with Zoopla’s latest House Price Index revealing a drop in house prices and a rise in property discounts. According to the report, house prices have decreased by 1.2% over the past year. This change is accompanied by a rise in the average sale discount, now reaching £18,000 or 5.5%, the largest gap in five years.
The report indicates a strong buyer’s market, driven by increased mortgage rates and a surplus of homes for sale. This environment has led to sellers accepting lower offers, with the average discount for sales now at a five-year high of 5.5%. In London and the South East, the discounts are even steeper, averaging 6.1% or £25,000 off the asking price.
Despite a 13% drop in buyer demand from 2019, sales volumes are showing resilience, with new sales 15% higher than last year and 5% above 2019 levels. This suggests a shift in seller expectations, adapting to the current market dynamics. The increased supply of homes, now at a six-year high with a 34% rise compared to last year, is also influencing this trend.
Richard Donnell, Executive Director at Zoopla, comments on the market conditions: “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. 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.”
Guy Gittins, CEO of Foxtons, points out the unique position of the London market: “London is consistently the highest value UK property market, so it is less susceptible to the market fluctuations seen elsewhere in the UK. This means London’s homeowners are well-positioned to capitalise on the upcoming bump we see annually from Boxing Day and into the new year.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, emphasizes the challenges for sellers: “Black Friday has hit the property market, which means a bleak time for sellers. They’re having to slash 5.5% off asking prices to secure a sale, providing the biggest discounts for five years. This doesn’t bode well for the future of property prices.”
The current state of the UK housing market presents an advantageous scenario for buyers, offering opportunities for significant savings. However, for sellers, the situation poses challenges, necessitating price adjustments to stay competitive in an increasingly buyer-driven market.
