Price cutting by homeowners desperate to shift their property in a slowing market has reached the highest levels in six years, according to an analysis by website Zoopla.
Just over 35% of the homes marketed on the site have marked down their price in the hope of achieving a sale, with the biggest discounts in the London property market.
The 35% figure compares with 29% just before the EU referendum in 2016, although it is below the levels recorded in the aftermath of the financial crisis.
Sellers in Richmond and Kingston upon Thames in south-west London, both relatively prosperous areas, are among those to have made the deepest reductions in sale prices. Zoopla put the average mark-down by sellers in Kingston at £84,244.
It added that around half of all the properties for sale in Kingston and other nearby locations such as Mitcham and Camberley in Surrey have been reduced since their first listing, indicating that sellers are having to significantly readjust their hopes in the light of the Brexit vote.
Lawrence Hall, at Zoopla, said it was good news for first-time buyers trying to get on the property ladder.
“A slight rise in levels of discounting is to be expected at this time of year when house-hunters are likely to be delaying their property search until activity picks up in January,” Hall said. “Those on the look-out for a bargain should consider looking in Camberley or Kingston upon Thames in the south, or areas of the north-east – home to some of Britain’s biggest discounts.”
The average asking price reduction across the country currently stands at £25,562, according to Zoopla.
The property website said towns in Scotland and northern England have proved more resilient to discounts. About 16% of homes in Edinburgh have been reduced in price, followed by 19% in Salford, 22% in Glasgow, and 25% in Manchester – all below the national average.
In London, 39% of property listings have recorded a price reduction, up from 37% in July.
Economists predict that a number of factors will weigh on house price growth in 2018, including falling real wages and weak consumer confidence as Britain’s future outside the EU remains uncertain.
“We see house prices rising a modest 2-3% in 2018,” said Howard Archer, chief economic adviser to the forecasting group, the EY Item Club. “The fundamentals for house buyers are likely to remain challenging over the coming months with consumers’ purchasing power continuing to be squeezed by inflation running higher than earnings growth. Additionally, housing market activity is likely to be hampered by fragile consumer confidence and a limited willingness to engage in major transactions.”
Archer added that the Bank of England’s decision in November to raise interest rates for the first time in a decade could be another factor to dampen the housing market in the months ahead.
“While the increase in interest rates was just 0.25% [to 0.5%] and mortgage rates are still at historically very low levels, the fact that it was the first rise since 2007 could have a significant effect on housing market psychology,” he said.
Source: The Guardian