Dip in Demand Brings Modest Discounts
House Price Growth Steadily Falls
Welcome back to EO Estate Agents’ market update!
Data from February helps bring to focus the trajectory that the market looked to be taking at the beginning of 2023.
As was expected, house price growth has continued its decline. It is now at a 5.3% growth compared to 5-year averages, down from 6.5% last month and 8.6% last year. Discounts in this market are commonplace. The average discount to the asking prices in February was £14,000. This is roughly one-third of the average gains a homeowner would have experienced during the pandemic inflation of house prices.
The most optimistic way to interpret this is, by selling now, vendors are cementing those gains. If the intention is to upscale to another property, then it is likely that the other property has experienced discounts too. In this way, for vendors, a 4.5% average discount to asking price is not as challenging a prospect as it may first appear.
For buyers who are worried over increase mortgage rates, the discounts and increased stock on the market, are strong motivators to proceed with a purchase.
Marginally Better Than Normal
Market conditions are solidly in line with pre-pandemic levels of 2017 to 2019. Demand is up 8% compared to pre-pandemic levels and the number of sales agreed is up 1%. With 2017-2019 being considered more indicative of ‘normal’ market conditions, it means the current market is marginally stronger than what is considered ordinary for the UK property market.
A year-on-year comparison is far less flattering but the pandemic-driven drive for more space was never forecasted to bring about permanent changes to the market. Especially considering the end of the stamp duty holiday and Help to Buy.
With these seasonal and artificial boosters to the market health gone, the market now requires a healthy dose of realism in regard to negotiating asking prices.
And sellers, with solid reasons to move, have proven able to meet this burden. Zoopla says:
‘It is welcome to see evidence of greater realism from sellers on pricing to secure a sale.’
Luiz De Souza