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UK house sellers are increasingly cutting prices to secure deals even as the normally busy autumn selling season gets under way, according to data from property platform Zoopla.
Discounts have increased to 4.2 per cent from the original asking price over the past four weeks, representing an average of £12,125, the highest level since March 2019.
The evidence that more sellers are cracking on pricing comes a week after the Bank of England paused its long series of interest rate increases.
Stable borrowing costs will be a relief to the property market, but analysts said the likelihood that rates would stay high for a prolonged period meant further falls in house prices would be required before market activity recovered.
“I am getting quite a lot of price reductions sent through to me every day,” said Robin Thomas, a consultant at buying agency Recoco Property Search, in the south-west of England. “There is a mismatch between what sellers expect to achieve . . . and what buyers are prepared to pay.”
Mortgage lenders cut their rates over the summer, easing the affordability crunch for buyers. The average five-year fixed mortgage rate stands at 5.54 per cent, according to Rightmove.
Capital Economics, a consultancy, projects that borrowing costs will remain at relatively high levels and house prices will keep falling until mid-2024, dropping about 10 per cent in total from their peak in August 2022. House prices fell 4.6 per cent in the year to August this year, the largest drop since 2009, according to Halifax.
“It certainly remains a buyer’s market,” said Richard Donnell, research director at Zoopla. “The asking price isn’t the value of the home. It’s the starting point. In today’s market, buyers are negotiating a bigger discount.”
A third of homes that sold had their prices cut, of which one in 10 dropped by more than 10 per cent before finding a buyer, Donnell said.
Thomas said some agents were overpricing properties at first to win instructions. Properties that don’t see interest right away are more likely to require a price cut. But he added that a larger share of top-end properties were being sold off-market, where price reductions were rarer.
Homes in London and the south-east of England recorded the biggest discounts, Zoopla said. Despite the pick-up in demand and sales going into the normally busy September and October selling season, Zoopla expects the number of house sales will end the year at 1mn, a fifth less than last year.