A lack of demand from homebuyers is forcing sellers to make huge cuts to their asking prices, which could see property prices fall “sharply” over the next few months, brokers have said.
The housing market has been broadly stable over the past year, with data showing a steady increase the property prices. But new figures suggest prices have cooled in recent months – which could be good news for first-time buyers.
Data from Halifax shows house prices in the UK fell by £794, or 0.3 per cent, in September, declining to an average of £298,184. Over the past year, house-price growth slowed to 1.3 per cent.
Now, experts say prices could continue to fall as demand from buyers stagnates amid concerns about what may be in the upcoming Budget.
They say that many buyers are concerned about potential tax changes, with speculation that Rachel Reeves is considering replacing stamp duty with an annual property tax.
Omer Mehmet, managing director of brokers Trinity Finance, said: “It’s meant to be a buyers’ market, but many buyers are MIA.
“Higher mortgage rates and constant rumours of new property taxes mean people are holding back, even when prices are being slashed. Sellers are having to cut prices hard to tempt anyone through the door.”
square PROPERTY AND MORTGAGES We bought our first home costing £320k with just a £16k deposit - here's how
Read More
Chris Barry, director at conveyancing firm Thomas Legal, said that house-price indices have for a while seemed “out of sync” with the “sharp price corrections” that professionals are seeing on the ground.
“The rapid decline in buyer numbers will lead to price reductions across large parts of the market,” he said. “We are seeing multiple price reductions daily in an attempt to entice what little buyers there are to commit quickly given the Budget at the end of November.
“A pull-back in prices is what the market needs but the current rate of decline is more than many expected. Sellers could be in for a rude awakening at this rate.”
Ross Lacey, independent financial adviser at Fairview Financial Management, said his company was seeing buyers generally taking a “more cautious approach”, despite the lower prices on offer.
“This may be in part driven by the uncertainty of what’ll come out in the Autumn Budget, but also, anecdotally, the appetite to start the buying process in the final few months of the year seems to be waning,” he added.
How does buyer demand affect house prices?
A buyer’s market is where the supply of homes for sale outstrips the demand for them – so there are more people selling than there are people willing to buy.
It can mean prices gradually fall as sellers try to flog their homes at lower rates, as there is less competition for each property.
When the reverse happens – where demand outstrips supply – it’s known as a seller’s market, as sellers can charge higher prices.
Jonathan Hopper, chief executive of Garrington Property Finders, said: “Two factors are combining to hold prices down: a flood of supply, which has made this a buyer’s market, and a ‘back-to-school’ reality check among sellers.
“Deals are being done, but in many parts of the country there are many more sellers than serious buyers, and this is allowing buyers to take their time and negotiate hard on price.
“In response, sellers are being forced to price their homes keenly just to get potential buyers through the door.”
Property experts say that while this is bad news for sellers, it’s great news for first-time buyers who have been struggling with housing affordability over the past few years.
Mr Hopper said: “Flat or even falling house prices are encouraging a steady stream of first-time buyers to take the plunge and look for their first home.”
Alice Haine, personal finance analyst at BestInvest, added: “The current flatness in the market may offer some relief [for first-time buyers], particularly if sellers continue to price more realistically and mortgage rates remain stable.”
What comes next?
Experts say that homeowners are adopting a “wait-and-see” approach until after the Budget, so after that, the housing market could start picking up again.
If the Budget brings bad news for sellers, the property market could continue to stall, while any incentives for homebuyers could increase demand.
People will also be keeping an eye on mortgage rates which have remained relatively stable in the past few weeks.
Babek Ismayil, chief executive of homebuying platform OneDome, said: “Some homebuyers may actually be holding out in the belief that there could be some fiscal incentives announced in November.
“If there are, that could see the market swing back very quickly in favour of sellers.”
What should buyers and sellers do?
First-time buyers thinking of making the leap may want to consider doing so now while the market is in their favour, experts say.
Ms Haine said: “In this environment, buyers should seek out an independent mortgage broker to help secure the best deal, and a trusty legal team who can thoroughly review the purchase to spot any red flags and ensure value for money.
“Most mortgages can be locked in up to six months in advance, and if rates fall before the term begins, borrowers can often switch to a better deal.”
She added: “For sellers, realistic pricing and prompt action on legal paperwork – such as providing guarantees and documentation – are key to ensuring a smooth transaction.”
Guy Gittins, chief executive of estate agency Foxtons, said sellers should maintain a “pragmatic approach” to pricing in line with current market conditions.
“Those looking to complete their sale before Christmas need to be entering the market now with the right agent and an added sense of urgency,” he added.
Hence then, the article about house prices could drop sharply in coming months over budget concerns was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( House prices could drop ‘sharply’ in coming months over Budget concerns )
Also on site :