UK house prices: Huge rise in Britons being forced to accept discounts after mortgage rate hikes
The number of agreed sales continue to rise but many sellers are slashing asking prices
PA
British homeowners looking to sell their property are being pressured by mortgage rate hikes into accepting low ball offers.
Soaring mortgage rates have not only made sellers that are feeling the pinch more eager to sell quickly, but also contributed towards diminished demand from borrowing buyers.
More than two in five (42 per cent) house sellers are accepting decreases of at least five per cent on the asking price, the highest level since 2018, according to the Zoopla House Price Index.
Nearly one in six (15 per cent) sellers are accepting a discount of more than 10 per cent on the initial asking price, while buyers are pushing for an average reduction of 3.8 per cent.
Despite agreed sales coming in at eight per cent higher than the five-year average, annual house price growth has slumped to 1.2 per cent.
A flurry of sales in spring put some wind in the market’s sales, yet prices remain on track to be five per cent lower by the end of this year.
Jean Jameson, Chief Sales Officer at Foxtons, told GB News: “The market is busier than expected and the volume of sales across London is in line with what we saw last year, despite the rise in interest rates.
“Foxtons’ housing stock has significantly increased year-on-year and we’ve not seen a significant increase in stressed sellers in the residential market as a result of the interest rates rise.
Over the last four weeks, the number of house seekers has fallen by 14 per cent on the five-year average.
PA
“Since the mini-budget, sellers have had to be slightly more competitive with their pricing in order to stimulate interest in their property.”
Meanwhile, over the last four weeks, the number of house seekers has fallen by 14 per cent on the five-year average.
As mortgage rates increase from four to six per cent, purchasing power has been reduced by 20 per cent.
While Scotland, the North East and London remain with their heads above the water with above average new sales being agreed, market conditions have deteriorated in southern England and the Midlands.
Richard Donnell, executive director of Zoopla, said of the new figures: “Modest price falls will resume in the second half of 2023 as the supply of homes increases, giving buyers more choice and room for negotiation on price.
New figures from the Zoopla House Price Index shine a light on the state of the UK housing market
PA“We still expect house prices to be 5pc lower over 2023 and there is a very substantial equity buffer to absorb price falls which are likely to be concentrated across southern England.
“Demand for homes remains but those households looking to move home in 2023 need to be very realistic on pricing and get the view of agents on where to pitch their asking price to secure a sale.”
Mark Shoffman, Editor of Estate Agent Today, told GB News: “We’ve seen interest rates rise, mortgage rates have gone from around three per cent to now above six per cent.
"That’s hitting buyer budgets, making it harder for a seller to attract buyers to come and view their properties.”
Matt Thompson, head of sales at Chestertons, said: “In London, many buyers paused to reassess their options at the end of last year and have sat on their hands while watching what the market does.
“Although interest rates have continued to rise, there has not been the big price correction that many commentators forecast and we are now seeing cautious confidence returning to the market with more buyers offering on properties and more sellers coming to the market.”