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10% price cuts and transactions tumbling as agents prepare for tough market

Homes for sale in some parts of inner London are seeing price discounts of up to 10 per cent says Hometrack - and transaction volumes in England and Wales are over 14 per cent down on a year ago according to the Land Registry.

Starting with Hometrack, the consultancy says that in 2014 the average discount from listing price across London was just 0.5 per cent per cent but today this has widened to an average of 4.0 per cent with the largest discounts of up to 10 per cent being registered in inner London where price falls are most concentrated.

“The level of discounting provides insight into the strength of underlying demand for housing across UK cities. Asking prices tend to act as the ‘shock absorber’ to softer pricing as demand weakens. However, once discounts get close to 10 per cent, this is when falls in headline prices start to occur” according to Richard Donnell, Insight Director at Hometrack.


He is also warning that the annual rate of house price growth is negative in Oxford, Cambridge and Aberdeen as weaker demand and economic factors results in lower prices.

Therefore in these cities, and London, it’s becoming a buyer’s market. 

The converse is true in large regional cities such as Edinburgh, Birmingham, Manchester and Glasgow where the advantage has shifted towards sellers as the discount from the asking price to sale price continues to narrow.

Birmingham and Manchester have seen the discount more than halve from 6.0 per cent in 2013 to just 2.7 per cent last year. A similar pattern has been recorded in cities outside southern England, supporting Hometrack’s view that there is further upside for house prices in regional cities over 2018.

The Scottish system for selling homes is different to England and Wales with property typically marketed as ‘offers over’ a listing price. 

Hometrack’s analysis shows that sales values are at a premium to listings prices. The premium has increased over 2017 to average 4.0 per cent in Glasgow and 7.0 per cent in Edinburgh. The consultancy says this is consistent with robust levels of price inflation currently being recorded in these cities and reports of a shortage of homes for sale.

In terms of year on year house price growth, Edinburgh is the UK’s fastest growing city (8.2 per cent) followed by Birmingham (7.5 per cent) with Manchester and Glasgow also registering growth in excess of seven per cent per annum. 

Aberdeen (down 9.9 per cent), Cambridge (down 1.4 per cent), Oxford (down 0.9 per cent) and London (up 1.8 per cent) continue to bring up the rear posting negative growth or in the case of London, growth below the rate of inflation.

Donnell continues: “These results confirm our view that the housing market is following the pattern registered in previous housing cycles with high rates of growth in London over the first half of the cycle being followed by low growth and an acceleration in regional housing markets as prices recover off a low base. 

“We appear to be at this transition period once again. The gap between the annual growth rate in London (up 1.8 per cent) and the average across the large regional cities of Birmingham, Manchester, Edinburgh and Glasgow (up 7.5 per cent) is widening and at its highest since September 2005.”

Hometrack’s figures come on top of yesterday HM Land Registry data which shows that transactions in England and Wales fell by over 14 per cent in 2017. 

The data reveals just 70,943 residential sales registered in December - down from 99,385 in November.

This takes 2017’s total to 850,281 - over 14 per cent down in the previous year.


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