Discounts Grow for Landlords Expanding Portfolios

The housing market remains a buyers’ market, with 80 per cent more homes for sale than in September 2021 according to a new Zoopla analysis.

And the portal says this gives buyers options to negotiate with sellers, and has resulted in an increase in discounts to asking prices over the summer.

The average discount is now 4.2 per cent or £12,125 off the original asking price. This is the biggest average discount since March 2019, although still below the highs of late 2018.

Discounts to asking prices are greatest on London and South East England properties, where sellers are knocking 4.8 per cent off their asking price on average. The rest of the UK collectively averages a 2.8 per cent discount.

Meanwhile Zoopla’s house price index has recorded a tiny 0.5 per cent fall in house prices over the last year - although this is the first annual decline for over a decade, since June 2012.

It says that while many households have delayed moving because of inflation and high interest rates, the housing market has been somewhat protected by more fixed-rate loans, tougher affordability testing and a robust jobs market. These factors mean there are fewer forced sellers in the market.

The house price falls are concentrated in the South of England, where higher mortgage rates have a bigger impact on buyer affordability.

In Scotland, on the other hand, house prices have risen 1.6 per cent in the last year. House prices are 40 per cent below the national average here, so many buyers can afford higher mortgage rates.

Zoopla expects small month-on-month falls in house prices throughout autumn with 2023 ending some 2.0 to 3.0 per cent lower than the start of the year on average. This would leave house prices 17 per cent higher than at the start of 2020, just before the pandemic.

The portal says the small house price falls so far are not enough to boost affordability and support a recovery in property sale volumes - even if mortgage rates dip below 5.0 per cent - and it anticipates further modest house price falls into the start of 2024.

Richard Donnell, executive director at Zoopla, says: “The housing market continues to adjust to a higher mortgage rate environment. Better news on inflation and the end of base rate increases has provided scope for lenders to start reducing mortgage rates which has supported a modest uptick in demand for homes this September.

“Buyers continue to remain cautious and many are waiting for better value for money and improved affordability from lower house prices or further falls in mortgage rates before returning to the market.

“House price falls have been modest with the average house still 17% more expensive than before the start of the pandemic. Forbearance by lenders, tougher mortgage regulations over recent years and a strong labour market appear to have moderated the stress in the market compared to previous cycles that would have driven larger price reductions.

“House prices will continue to drift lower, especially in southern England, ending the year 2-3% lower meaning falling mortgage rates are required to boost activity and attract buyers back into the market.”

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