Half of properties that sold last month had their asking prices slashed in order to so, new data has revealed.
The estate agent Hamptons said that 50 per cent of homes in England and Wales sold following a price reduction in July, up from 47 per cent in June and from 34 per cent in July last year.
It said that the proportion of sellers reducing the price of their home had reached the highest level in at least nine years, when it started collecting this data.
Slashed: 50% of homes in England and Wales sold following a price reduction in July, up from 47% in June and from 34% in July last year
Henry Pryor, a professional buying agent and property expert says there is still somewhat of disconnect between buyers and sellers at present.
‘Sellers think it’s 2022. Buyers think it’s 2017,’ he said. ‘It’s dawning on buyers that they no longer have to pay sticker price, which leaves sellers and their agents struggling to work out if they should price expecting to be chipped or if they price realistically and hold their ground.’
Price cuts are happening more often on more affordable homes, where sales are more likely to be needs-based and where higher mortgage rates are hitting hardest, Hamptons said.
In July last year, 36 per cent of properties worth between £500,000 and £750,000 were sold following a price reduction, compared to 52 per cent this year.
Similarly, 31 per cent of properties selling for up to £250,000 in July last year required a prior price reduction. This has now increased to 49 per cent this year.
Although 53 per cent of homes selling at £1million or more required a price cut in July, that was only up from slightly from 46 per cent last year.
Aneisha Beveridge, head of research at Hamptons, believes higher mortgage rates may have prompted caution among many buyers and forced some sellers to reduce their expectations.
Between 1 June and and the end of July the average two-year fixed rate mortgage rose from 5.49 per cent to 6.86 per cent, according to Moneyfacts.
Beveridge says: ‘Mortgage rates surpassing mini-budget highs in early July added further caution to the housing market.
‘Higher rates have acted as a wake-up call to sellers who had been on the market for some time, prompting a record share to cut their asking price.
‘While sellers at the top end of the market remain most likely to sell their home following a price reduction, the increase has come from households selling more affordable homes.’
| Price band | Jul-19 | Jul-22 | Jul-23 |
|---|---|---|---|
| Up to £250k | 42% | 31% | 49% |
| £250k-£500k | 48% | 33% | 48% |
| £500k-£750k | 49% | 36% | 52% |
| £750k-£1m | 56% | 40% | 55% |
| £1m+ | 57% | 46% | 53% |
| Overall | 46% | 34% | 50% |
| Credit: Hamptons |
She adds: ‘A steadier transition to higher mortgage rates would likely have left the housing market this year in a better place.
‘Rather, both buyers and sellers have grappled with yo-yoing rates which have created uncertainty, meaning many would-be movers are choosing to sit tight and wait for clarity.
‘While the latest raft of rate cuts from lenders on the back of the improved inflationary outlook will help, the growing expectation that rates will stay higher for longer will be a tough pill for heavily mortgaged households to swallow.’
Homes taking longer to sell
Unsurpringly, it is also taking homeowners longer to sell their homes than in the past, according to Hamptons.
It took the average seller 49 days on average to accept an offer on their home last month, making it the slowest July to sell a home since 2013.
Time to sell has increased the most for £1million plus homes, which again suggests that sellers are happy to hold out until they receive an acceptable offer.
| House price | Jul-14 | Jul-15 | Jul-16 | Jul-17 | Jul-18 | Jul-19 | Jul-20 | Jul-21 | Jul-22 | Jul-23 |
|---|---|---|---|---|---|---|---|---|---|---|
| Up to £250k | 43 | 45 | 38 | 35 | 33 | 40 | 41 | 23 | 32 | 47 |
| £250k to £500k | 39 | 45 | 41 | 43 | 47 | 49 | 35 | 22 | 30 | 47 |
| £500k to £1m | 49 | 52 | 56 | 65 | 66 | 55 | 44 | 31 | 42 | 63 |
| £1m+ | 57 | 55 | 80 | 92 | 69 | 67 | 55 | 42 | 43 | 76 |
‘Having done this for 40 years I have seen this before,’ says Pryor, ‘sellers always take longer than you expect to appreciate that the market has moved and that for most it doesn’t actually matter.
‘What impacts on their sale will impact on their purchase. Understandably perhaps no one wants to be the first to blink and drop their price, but eventually most will.
‘Buyers will hold back waiting for an acknowledgement that the market has changed, although those hope to do deals 20 per cent below the asking price will be waiting a long time.’
| Number of beds | Jul-19 | Jul-22 | Jul-23 | YoY |
|---|---|---|---|---|
| 1 bed | 65% | 45% | 51% | 6% |
| 2 bed | 62% | 38% | 53% | 15% |
| 3 bed | 63% | 34% | 53% | 19% |
| 4+ bed | 71% | 45% | 67% | 21% |
Hamptons also revealed that buyers achieved a 4.5 per cent discount on average unchanged from last month.
It said that larger homes have been more likely to sell below their asking price than last year.
Last year 45 per cent of homes with four bedrooms or more sold at below their asking price. This has risen to 67 per cent as of July this year.
The research was compiled using data from 550 estate agency branches across the UK who are part of its parent company, the Connells Group.
