Vendors are now facing a buyers’ market as a glut of unsold properties means many of them particularly those in London are cutting their asking price to attractive offers, says Rightmove.
The portal’s latest monthly house price index shows a 1.25 national drop in asking prices during July, reducing the average to £373,700, although price reductions in the Capital are more severe at 1.5% in it outer suburbs and 2.1% within its central postcodes.
It says this dip is, despite a traditional reduction in offers as many people go on holiday, the largest reduction in asking prices seen since the portal began collecting data 20 years ago, and that vendors are having to resort to big cuts to attract offers.
The tactic appears to be working – sales have increased by 5% and next month may see balance restored to the market; Rightmove reports a 6% jump in buyers enquiring about properties for sale.
In previous years such a price drop might have been an indicator of a slower market.
But ‘tempting pricing’ from new sellers is helping to improve buyer affordability, enticing new buyers into enquiring, and helping year-on-year growth in the numbers of sales being agreed.
The portal claims that pricing is key, and sellers who are over-optimistic on their initial asking price are increasingly at risk of getting lost among the competition.
Interesting dynamic
“We’re seeing an interesting dynamic between pricing and activity levels right now,” says Colleen Babcock, Rightmove’s Head of Partner Marketing (main image).
“The healthy and improving level of property sales being agreed shows us that there are motivated buyers out there who are willing to finalise a deal for the right property.
“What’s most important to remember in this market is that the price is key to selling. The decade-high level of buyer choice means that discerning buyers can quickly spot when a home looks over-priced compared to the many others that may be available in their area.
Industry reaction
Jeremy Leaf
Jeremy Leaf, north London estate agent and a former RICS residential chairman
“What’s particularly interesting about these figures is that they confirm what we’ve been seeing on the ground recently,” he says.
“Asking prices are not of course values but invariably an owner’s aspirational starting point to determine if genuine buyers are attracted.
“Sales are still being agreed but nearly always with sellers who have recognised the importance of setting a realistic initial figure to differentiate themselves from so much other, often similar, property.
“Otherwise, buyers will take even more time waiting for the ‘right’ property and perhaps worrying about the possibility of autumn tax rises despite improving affordability – including the likelihood of imminent mortgage rate cuts.”
Nathan Emerson, CEO of Propertymark
Nathan Emerson, Chief Executive, Propertymark
“The housing market is witnessing a steady return to normality following Stamp Duty threshold changes for those living in England and Northern Ireland at the start of April,” he says.
“As we enter the summer months, when the housing market tends to achieve a peak in sales in activity, it is good to see yet further resilience in house prices year on year.
“We have seen encouraging signs from Rachel Reeves’ Leeds Reforms which are designed to potentially better help lenders serve those on lower incomes.
“However, such reforms alone will not help keep house prices manageable without the UK Government and the devolved administrations meeting their individual housing targets to keep pace with real world demand.”