A growing number of home vendors are being compelled to reduce their asking prices to expedite the sale of their properties.
According to Rightmove, the average time it takes for a seller to locate a buyer has increased by three weeks, from 45 days last year to 66 days.
Additionally, the prevalence of price reductions has increased in 2023, with 39% of properties now undergoing price reductions during the marketing phase, up from 29% the previous year.
Rightmove forecasts that vendors will persist in setting optimistic prices for newly listed properties, with the average asking price experiencing a marginal decline of 1 per cent by the conclusion of 2024.
Rightmove predicted a 2% decline in average asking prices for new sellers in 2023 a year ago; as of now, they have decreased by 1.3% annually.
Market Resilience Despite Challenges
However, Rightmove property expert Tim Bannister argues that the market has proven considerably more resilient despite higher mortgage rates than many had anticipated.
“This year has been better than many anticipated,” he said, “with no significant indications of forced sellers, price declines less severe than anticipated, and strong buyer demand for quality properties priced appropriately.”
Nevertheless, some sellers have needed help adjusting their mentality since the frenetic market of the preceding years.
“As the level of agreed-upon sales is 10% lower than it was at this time in the more typical market of 2019, sellers will need to set prices even more competitively to secure a buyer for the following year.”
In 2024, how can merchants locate a buyer?
Even though asking prices for newly listed items have remained relatively stable, the critical determinant is the final selling price.
Those who set their prices excessively high may experience prolonged buyer apathy and may need to lower their asking price multiple times to secure a deal.
Additionally, modest offers might compel sellers to give careful consideration.
A recent report by Zoopla states that, due to an increase in the number of homes on the market, buyers are currently agreeing to one in every four transactions for 10% or more than the asking price.
Navigating Local Markets for Sellers
In 2024, we encourage motivated sellers to set more competitive prices to attract buyers, especially if their local area has an oversaturation of homes for sale.
According to Rightmove, proper starting pricing “maximises the initial impact” among local buyers and significantly increases the probability of a successful transaction for new sellers.
“The housing market is comprised of thousands of local markets, each with its own supply and demand dynamic, ” says Bannister.
New seller asking prices in regions with more discretionary sellers and fewer available properties may remain stagnant or experience a marginal increase compared to the current year.
We can expect to see even more competitive pricing in regions where sellers need help to attract buyers with limited budgets or who are hurrying to sell for reasons such as a change in circumstances, new employment opportunities, or a strong desire for a lifestyle change.
Will the market favour buyers in 2024?
While interest rates remain elevated compared to historically low levels, the mortgage market is considerably more tranquil than recently.
Since July, mortgage rates had declined consistently, providing movers with more stability and certainty regarding their prospective monthly expenses compared to last year, when the mortgage market was more volatile.
Moneyfacts reports that the average five-year fixed rate has increased to 5.65%, with the most affordable packages now penetrating below 4.5 per cent.
Shifting Perspectives and Market Predictions
Individuals who put off their relocation preparations for the previous year may reconsider beginning their relocation at the beginning of 2024, given their improved ability to budget.
Former Rics residential chairman and North London estate agent Jeremy Leaf predicts the market will regain some optimism at the start of the following year.
Despite a 15-year high in the base rate and persistent inflation, buyers are demonstrating that a correction is unlikely, he says, even though transactions are taking longer and prices are declining.
Additionally, robust employment supports activity.
While we do not anticipate significant progress in the forthcoming months, we expect a gradual improvement due to the tendency for optimism to peak at the start of each year.
Mark Harris, chief executive officer of mortgage broker SPF Private Clients, is confident that rising mortgage rates will motivate many prospective homeowners and movers to move forward with their plans.
“New mortgage rates are headed in a downward direction, as several lenders reduced rates this past week, providing borrowers with an early Christmas present,” he says.
“Despite the fact that two-year and five-year fixed-rate mortgages are now accessible at or below 4.5%, interest rates may be on the rise, but they are becoming more tolerable.”