"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"
- Richard Donnell - Zoopla
Home buyers are securing an average of £18,000 off their next home in order to confirm a sale and further evidence of a strong buyers' market as higher mortgage rates hit demand and more supply boosts choice and negotiating power.
According to Zoopla’s latest House Price Index, the discount to asking price for achieved sales is now at a five-year high and has grown to 5.5% for sales over the first half of November compared to a 3.4% average discount in the first half of 2023. 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.
Sales holding up despite fewer buyers in the market
Despite buyer demand remaining 13% lower than in 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.
However, 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.
Record high supply of homes for sale
In good news 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 choices 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 the North-West have less supply than their pre-pandemic levels.
Value for money supporting sales and prices in London
House prices continue to fall across much of the UK with single-digit annual price falls being recorded across all price bands. While higher mortgage rates have hit buying power, there is no evidence of an acceleration in price falls in the highest-value markets such as London.
In fact, annual price falls in London are lower than across the wider South East and adjacent commuter areas - in part thanks to better value for money and a steady return to office work which is supporting sale volumes and pricing levels.
London house prices remain high in absolute terms but they have failed to keep pace with the rest of the UK over the last six years as the average value of a London home is just 8% higher than seven years ago. This is compared to an increase of 28% across the rest of the UK.
Richard Donnell, Executive Director at Zoopla says: “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 at the start of the pandemic.
"It’s a positive sign that new sales continue to be agreed at a faster rate than a year ago and pre-pandemic. 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.“
Guy Gittins, CEO of Foxtons, adds: "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.
"In contrast to the rest of the country, London has not experienced a sweeping decline in house prices, however, the market does experience a higher volume of price adjustments. A good agent understands where the market is trading and has the data to find the best price that will still stimulate activity.
"Going into the new year sales surge, selecting the right agent that utilises the market information well will be critical to homeowner’s achieving their property goals.”