When sellers reduce their asking prices to close deals, homebuyers are getting the upper hand in the UK real estate market.
According to research from the real estate website Zoopla, this month’s average discount to the asking price needed to close a deal was 4.5%. This is an increase from 0.6% in the previous year and 0.4% in 2022, making it the highest in more than five years.
“Greater realism on the part of sellers is supporting housing market activity in the face of higher borrowing costs,” said Richard Donnell, executive director at Zoopla. “While 4 percent – 5 percent discounts are manageable, if these were to widen further then this would point to a greater likelihood of larger house price falls.”
Because pent-up demand caused a spike in housing prices during the epidemic, buyers were less likely to receive a discount. At this time, Zoopla reports that discounts averaging 14,100 pounds ($16,916) per sale have been made to the asking prices of more than 4 out of 10 homes posted for sale on its marketplace.
Sellers are giving up more than a third of the value of the ordinary UK home, which increased by 42,000 pounds on average during the pandemic. According to a survey by Zoopla, this is largely due to rising mortgage rates, which have reduced buying power by an average of 20% over the previous year.
Yet, according to Zoopla’s Donnell, homeowners will be substantially protected from the blow of selling their homes for less money.
“Many homeowners are sitting on sizable house price gains made over recent years and have more room to be flexible accepting offers below the asking price,” he said. “We believe the market remains on track for a soft landing in 2023.”