How to buy and sell a property in a market where house prices are falling
- Average new seller asking price has dropped 1.9% so far this month, to £364,895
- It’s a £7,012 drop, outpacing average 0.9% fall in traditional August slowdown
- Why has property market changed and how can you navigate those changes?
The housing market has changed significantly in the past year and you only need to look at property websites to see the number of asking prices that have been marked as ‘reduced’.
Rightmove says the average new seller asking price has dropped 1.9 per cent so far this month, to £364,895.
It is a drop of the equivalent of £7,012, and outpaces the average drop of 0.9 per cent in August’s traditional summer slowdown.
Property experts have revealed their top tips for buying and selling when prices are falling
Rightmove has outlined the average asking price changes during the past 12 months
It is a far cry from the hot property market of the pandemic when a shortage of supply and high demand meant fierce competition for homes, particularly those in rural or seaside locations.
But high mortgage rates and economic uncertainty is beginning to take its toll on the property market.
It means buyers and sellers have a new market to navigate. We speak to some property experts about what their tips are for buying and selling a home in the second half of 2023.
North London estate agent Jeremy Leaf, said: ‘Really try to understand the market you are buying in.
‘Demand has been exceeding supply but now it’s the other way round with more properties for sale than buyers.
‘The buyer is king of the hill in most cases so an offer that you might have thought would be unrealistic in the past might be considered more seriously now.’
Rightmove said the number of sales being agreed is now 15 per cent lower than at this time in 2019 as higher mortgage rates mean that some people have had to pause their moving plans for now.
It said that the larger than usual price drop this month indicates that some sellers are ‘seizing the initiative’ and pricing competitively to attract a buyer against the backdrop of holidays, cost of living pressures and the highest interest rates since 2008.
Property experts say the market has changed, with more properties for sale than buyers
Buying agent Henry Pryor goes even further and says he pays little attention to asking prices.
This, he says, is because it is ‘the buyer who decides a what a property is worth and the seller who has the luxury of deciding if it is enough’.
He explained: ‘Even in the red hot market we’ve witnessed over the past three years I pay little attention to asking prices.
‘They are a combination of the owner’s inflated opinion of their own home and the estate agent’s enthusiasm to get the business. The guide price is not a statement of value, it isn’t necessarily what the seller will accept, what the agent advised and you can’t take it into a bank and get a mortgage based on it.
‘It’s part of the marketing, there to get your attention and to encourage you to go and see it. As many as 75 per cent of properties currently sell for less than the asking price.
‘Lots of people judge the success or failure of their sale or purchase by reference to the asking price.
‘I paid 10 per cent less than the asking price’ is something I hear often, but is a sure sign you’re talking to someone who doesn’t understand how the property market works.
‘Some sellers also mistakenly refer to how much more they achieved than the asking price, as if the asking price was something more than just an aspiration.’
Rightmove reveals the changes in average asking prices during the past five years, with the index temporarily suspended during the pandemic
He went on to say that that current market is making it challenging for estate agents to quote a price.
He said: ‘In a falling market it’s hard for estate agents to decide whether to quote a price that they expect to be chipped on, or a lower figure that they will dig their heels in to achieve.
‘Buyers should treat an asking price as if it were a political promise. Best ignored.’
Higher mortgage rates mean that some people have had to pause their moving plans for now
Sellers must price sensibly
Those looking to sell their property must price sensibly if they are going to succeed in closing a deal, according to property experts.
Jason Tebb, of property website OnTheMarket.com, said: ‘As the annual decline in average property prices continues, the high cost of living and numerous rate rises are impacting how much buyers are willing and able to pay for their next home.
‘Motivated sellers would be wise to seek advice from an experienced agent who understands the market in their area, ensuring they price sensibly to achieve a timely sale.’
Be prepared to ‘break the chain’
Catherine Merrett, of estate agents Antony Roberts, said: ‘Realistic pricing is key as buyers are extremely price sensitive so consider lowering your asking price in order to attract more buyers and offers. Take the advice of an experienced local agent who really understands the market.
‘Ensure property is immaculately presented, with all maintenance is up to date, property uncluttered and spring cleaned. Keep the gardens looking smart also.
‘With increasing mortgage rate uncertainty and the higher cost of builders, buyers are sometimes more nervous with regards to property needing lots of work than they would have been a year ago.
‘Be prepared to break the chain if you receive an acceptable offer. Fall-through rates are higher this year so if there isn’t the right home on the market once you are under offer or you are involved in a long chain of sales, consider going into rented or stay with friends and family. Just get the deal done.’
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