UK homebuyers are getting some of the biggest discounts seen in over five years, with sellers accepting an average discount of 4.5% off their asking prices as they struggle to find buyers, according to data released by property website Zoopla.
The average property price in the UK is now £260,800, Zoopla said, which means sellers are taking an average cut of £14,100 per sale, the highest gap between asking and selling prices in half a decade.
It follows news earlier this week that renting in UK has become cheaper than taking out a mortgage for the first time in 14 years.
Average mortgage repayments have surged above £1,000 for the first time ever despite tumbling house prices, largely because of the Bank of England’s aggressive rate hike cycle which has drastically increased the cost of borrowing.
House price growth declined for the seventh straight month in January 2023, according to the Halifax house price index.
Source: tradingeconomics.com
Richard Donnell, executive director at Zoopla explained that “greater realism on the part of sellers is supporting housing market activity in the face of higher borrowing costs”.
The slump in housing prices is partially due to the pandemic-era boom, when pent-up demand saw house prices surge an average of £42,000.
Donnell signalled the likelihood of a soft landing in the housing market, with modest price falls of up to 5% and one million total housing sales in 2023.
“Many homeowners are sitting on sizable house price gains made over recent years and have more room to be flexible accepting offers below the asking price.”
While these discounts are manageable, Donnell suggested that “if these were to widen further then this would point to a greater likelihood of larger house price falls”.