"Agents report that other sellers still need to adjust their expectations on the price that they are likely to achieve in the current post-pandemic, lower-activity market"
Average new seller asking prices increased by 0.5% this month to £368,231, the smallest average asking price increase at this time of year since 2008, and well below the historic norm in October of 1.4%, according to the latest Rightmove data.
Despite this more muted rise in average asking prices, buyer activity levels remain significantly lower than during the post-pandemic market frenzy. The number of sales being agreed is now 17% below this time last year, with the proportion of homes finding a buyer and being marked Sold Subject To Contract dropping from an average of eight in ten at the height of the frenzy, to six in ten now.
Buyers are still active for the right property at the right price, but agents are advising that sellers need to capture a buyer’s attention with a competitive price from the first day of marketing. Rightmove analysis shows that starting too high and reducing later seriously damages the chances of a sale.
The number of buyers enquiring to each available home for sale is still 8% higher than at the same time in pre-pandemic 2019. If a property for sale receives its first buyer enquiry on the first day of marketing rather than after two weeks, Rightmove data shows that property is 60% more likely to find a buyer and be marked Sold Subject To Contract.
Accurately priced properties succeed in finding a buyer in less than half the time that it takes those that need a reduction, and when they do find a buyer the sale is also 50% less likely to fall through.
A more stable mortgage market is providing some home-movers with more confidence about what they are likely to be able to afford, even with rates remaining well above the ultra-low levels of recent years. The average two-year fixed rate is below 6% for the first time since June, and average two-year and five-year mortgage rates are both now lower than at this time last year during the post-mini-Budget period. In the last year, the average house price to earnings ratio has also decreased by close to 10%, meaning that buyer affordability, while still stretched, has improved compared to this time last year. Meanwhile, average fixed mortgage rates continue to trend downwards and have now fallen for 11 consecutive weeks, with the average five-year fixed rate dropping from 6.08% to the current 5.43% over that period.
Tim Bannister Rightmove’s director of property, commented: “New seller asking prices have seen a rise, as they usually do at this time of year following the summer holiday season. While this year’s much more subdued rise indicates that some new sellers are gradually heeding their agents’ advice to price competitively, agents report that other sellers still need to adjust their expectations on the price that they are likely to achieve in the current post-pandemic, lower-activity market, where six in ten homes are now selling rather than eight in ten. In a market that agents describe as the most price-sensitive ever, buyers are likely to be on the look-out for homes that they feel represent excellent value, and to attract one of these motivated buyers, sellers need to price right first time. If similar nearby properties for sale appear overpriced, serious sellers have an opportunity to stand out from the crowd with a more competitive price and attract immediate buyer interest that our research shows significantly increases the likelihood of finding a buyer.
“Mortgage rates continue to trend in the right direction and have now dropped for 11 consecutive weeks, with buyer affordability gradually improving compared to this time a year ago. Those with a larger deposit have seen the biggest benefit from recent rate drops, with rates for those with a smaller deposit, typically those further down the housing ladder, not dropping as quickly. The mortgage market is much more stable right now compared to three months ago, giving movers a little more assurance over the rate they are likely to be offered and therefore what they are likely to be able to afford. Those looking to secure a new home for the new year should apply for a Mortgage in Principle to work out what they could afford, and listen to local estate agents about what’s happening in their local housing market.”
