House prices fell 1.2 per cent in the past year, according to a new Zoopla report out today, with average discounts on homes currently for sale reaching new highs.
The average discount agreed on a sale has reached £18,000 – or 5.5 per cent – which is the biggest gap in five years.
The number of properties for sale is up 34 per cent in a year, to a six-year high. The average estate agency branch has 31 homes for sale, compared to a low of just 14 in the middle of the pandemic boom.
Sarah Coles, head of personal finance, Hargreaves Lansdown, says: “Black Friday has hit the property market, which means a bleak time for sellers. They’re having to slash 5.5 per cent 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 root of the problem is a lack of buyers, because higher mortgage rates are pushing potential properties out of reach. Demand is down 13 per cent from this point in 2019. At the same time, we’ve seen a rebound in the number of properties for sale – up a third in a year – so any potential buyers have plenty to choose from.
“It means sellers are having to pull out all the stops to shift their homes – including cutting the price. So far, this is ensuring that sensibly-priced properties are finally shifting, with sales up 15 per cent in a year. However, it’s worth bearing in mind the mini-Budget had unleashed carnage in the mortgage markets 12 months ago, so any comparison was bound to look fairly flattering.”
Coles warns that the worst is far from over. In a market like this, an awful lot of sellers will decide now is not the time to be trying to sell, and take their house off the market for now.
The Office for Budget Responsibility thinks transactions will keep dropping from here, and will be down an average of 6.9 per cent in 2024.
Coles continues: “This will take a toll on house prices. The OBR expects them to fall 4.7 per cent in 2024 – taking the peak-to-trough drop to 7.6 per cent. Even then it doesn’t think we’ll bounce back in a hurry, and will take until the second half of 2027 to get back to their 2022 peak.”
