Home sellers forced to slash prices as buyers head for the hills: Zoopla

11% of homes have had their price cut by more than 5% since September, and one in four (25%)  have had some sort of cut over this period. Demand has plummeted 44% since the mini-budget, and sales are down 28% in a year.

House price growth slowed to 7.8%. Prices are up 0.7% in a quarter – the lowest quarterly rise since February 2020. The average sale is 3% below the asking price.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “Hikes in mortgage rates mean runaway house prices have given way to runaway buyers. Demand has plummeted by almost half since the mini-budget, and one in four sellers are being forced to cut their prices. And this is just the beginning.

“On the face of it, house price growth is still 7.8% over the past year, which seems relatively healthy, and Zoopla says it’s not seeing price falls in any area. However, over the past three months, prices are up less than 1%, and all the signs point to a market that’s starting to struggle.

“Demand has collapsed since the mini-budget unleashed chaos on the mortgage market. Meanwhile sales are down – in some areas as much as 50%. Even once a sale is agreed, the proportion of sales that fall apart during the buying process is rising – and has hit 15%.

“One in four sellers have had to cut their asking price, and increasingly they’re having to accept an offer. For most of the past two years, sellers have on average achieved their asking prices. However, in recent months, a gap has opened up, so they’re having to accept offers 3% below the asking price. Zoopla estimates that when this discount hits 5%-7%, prices will be falling – and that can’t be far off now.

“There’s not an awful lot to be cheerful about in the property market at the moment, but there is one bright spot. Mortgage rates are coming down, and according to Moneyfacts, five-year fixed rates have dipped below 6%. As times get tougher, and the threat of more rate rises starts to fade, we may well see these rates come down further. It’s highly unlikely to be enough to turn the market around, and see buyers return once we’re deeper into the recession. However, more manageable rates may well mean that the market correction isn’t as dire as some analysts had predicted. Zoopla is putting its money on a 5% drop, reflecting a number of analysts forecasting single-digit falls by the end of next year.”