Buyer caution isn’t translating into ‘large price discounts’ (yet)

Properties are taking longer to go under offer but there is no evidence of large discounts on asking prices yet, Hamptons claims.

A market update from the agency brand found that despite rising mortgage rates, there have been no “obvious signs” that buyers are successfully negotiating big discounts on properties, with 52% of homes sold in June across England & Wales going below their asking price, the same figure as the previous month.

These homes sold for 4.4% below their asking price on average, a figure which has barely changed.

Fewer mortgaged buyers had an offer accepted below the asking price last month - 51% in June, down from 52% in May.  Consequently, a higher proportion of mortgaged buyers paid over the asking price as sellers remain firm on pricing.

It comes as it took 15 days on average between a buyer registering and them making their first offer on a home last month, the longest time recorded in any June since at least 2014.  

This is up from 13 days in June 2022 and just eight days in June 2020 when the housing market picked up pace following the first Covid lockdown.

First-time buyers, however, remain a little more earnest, submitting an offer 12 days on average after registering. 

It took an average of 52 days since coming onto the market for a home to receive its first offer in June, regardless of whether it was accepted or not. 

This is 19 days longer than in June last year and marks the second longest time between a home coming onto the market and receiving its first offer than in any June since at least 2014, only to be exceeded during Covid, Hamptons said.

Overall, it’s taking 48 days on average for a seller in Great Britain to accept an offer, 19 days longer than in June 2022.  

Covid aside, this makes it the slowest time to sell in any June since 2013, according to Hamptons figues.

It’s the mid-market that has slowed the most with the average home costing between £500k and £1m taking 28 days longer to sell than this time last year. 
 

Aneisha Beveridge, head of research at Hamptons, said: “Amidst the fragile economic backdrop and rising mortgage rates, buyers are becoming increasingly cautious.  Consequently, with more choice and less competition around than last year, would-be buyers are taking longer to make an offer.  Covid aside, this means it now takes longer to sell than in any June since 2013. 

“However, this caution isn’t necessarily translating into large discounts.  While there were 19% more homes on the market last month than in June 2019, most of this increase comes from the lengthening time it’s taking to sell each home.  With 11% fewer homes coming onto the market than at the same time in 2019, but only 4% fewer prospective buyers, the supply-demand imbalance continues to keep a floor under prices.

“Furthermore, with few forced sellers in the market, most vendors are prepared to wait and see what happens in the hope that they’ll achieve a better price and a lower mortgage rate in the future.  Ultimately, it’s transaction numbers that have been bearing the brunt of the slowdown as would-be sellers wait.”

This sentiment was echoed by conveyancing comparison website Reallymoving.

Based on 174,000 conveyancing quotes it analysed on its platform, the website suggests house prices may actually be 1.6% higher during the third quarter of 2023.

Reallymoving said the data from its comparison website, used by 10% of the housing market, indicates there is still a large contingent of buyers in the market who are “highly motivated” to move and are willing to swallow higher borrowing costs in order to secure the property they want. 

Rob Houghton, chief executive of reallymoving, said: “House prices have not fully recovered from the impact of the mini budget but despite rising mortgage rates, buyers and sellers have continued to agree deals at higher prices. We have seen a rise in downsizer activity over the last three months, now accounting for 29% of all home moves, many of whom will be relatively insulated from higher borrowing costs.

“If we begin to see more forced, or at least highly motivated, sales as growing numbers of households come to the end of their fixed rate deals, price falls may follow in the latter part of this year - but so far we’re not seeing much sign of sellers being forced to accept lower offers.

“Any buyer actively house hunting right now should ensure they have a mortgage offer in principle and have factored in the possibility that in the short term at least, the value of any property they buy may fall. Ideally home movers, particularly those with small deposits, should plan to stay in their property for at least five years so they can ride out any market fluctuations.”