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Sellers of UK residential property are expected to rein in lofty price expectations this year as buyers remain cautious despite falling mortgage rates, according to agents and housing market experts.
“I think those sellers who had pinned their hopes on doing the kind of extraordinary transactions that happened in the bullish times have had to get real,” said Roarie Scarisbrick, a partner at buying agent Property Vision. “Some of the froth is dissipating. There’s been a correction in expectations rather than values.”
According to data from estate agent Hamptons, a record 50 per cent of homes sold in England and Wales in 2023 went for a reduced price, up from 32 per cent in 2022. In 2021, 31 per cent of homes sold following a price reduction, a 10-year low.
Buyers also managed to negotiate an extra 1.4 per cent discount on average on properties that had been relisted at lower prices.
“Other agents and colleagues I’ve spoken to feel we had a tough year last year and 2024 will be challenging, but we feel there will be more of a narrowing of the gap between [sellers’] expectations and what buyers will pay,” said Robin Thomas, a consultant at Recoco Property Search.
“It’s taken sellers a while to realise the market has gone back to pre-2022 levels.”
Despite data released by Halifax showing that in December house prices rose for the third consecutive month, homeowners who have failed to sell their properties for overinflated prices are having to recalibrate to entice buyers.
“The incentive is, if you’re serious about moving you’ve got to put your house on the market at the right price,” said Zoopla’s head of research Richard Donnell. “Because what you think it is worth is not what it is really worth.”
Buyers deterred by high mortgage rates in 2023 have found some respite as rates have eased in recent months. According to finance site Moneyfacts, the average rate for a two-year fixed mortgage is 5.66 per cent, down from the July peak of 6.86 per cent. Average rates for a five-year fixed mortgage are 5.28 per cent, compared with a 6.37 per cent peak last August.
Buyer demand, as measured by inquiries to agents, rose by 14 per cent in the first week of 2024 — with rebound strongest in London and the south-east, Zoopla said.
“Some buyers that were sitting on the fence and renting because they couldn’t afford to borrow will be able to crack on now that rates are more sensible,” said Camilla Dell, a managing partner at Black Brick Property Solutions, a London-based buying agent. “We’re also pretty busy with new US, European and Middle Eastern clients.”
“The mood music is that everyone wants to buy a property, but wants a good deal,” said Scarisbrick.
Agents also report buyers being pickier about the non-financial side of deals, such as planning permission and lease discrepancies.
“I’ve seen buyers be really unwilling to take a view on properties they normally would have,” said Jo Eccles, founder of Eccord, a buying and management company which expects to see a 30 to 40 per cent increase in buying clients this year based on December inquiries. “Not only does the price need to be right, but the i’s dotted and t’s crossed.”