One in three homes that have found a buyer were previously advertised at a higher price, with some cities seeing even more sellers forced to blink first, new figures show. Higher borrowing costs, rising unemployment, tax increases and a Budget that offered little comfort to homeowners are all weighing on confidence. Land Registry figures show UK property transactions fell 4% in September compared with a year earlier. And that was before last week's base rate hike to 4% by the Bank of England.
Rightmove found that more than 3,000 properties a day had their asking prices cut during the month, the highest figure for 15 years. The average reduction was nearly 7%, or around £21,000 on the average property. Research from GetAgent found that 34.4% of homes sold subject to contract across Britain's major cities had previously suffered an asking price reduction. Bournemouth topped the list, with more than half of agreed sales having been reduced. Portsmouth, Brighton, London and Nottingham also featured among the worst affected. The UK housing market just suffered its biggest drop in three years.
Colby Short, co-founder and chief executive of GetAgent, said this raised questions about how realistically homes were being priced in the first place. “There’s always a temptation for sellers to pursue the highest possible asking price, and agents can find themselves under pressure to deliver that valuation in order to win the instruction. But starting too high can mean missing the strongest period of buyer interest, only to reduce the price further down the line.”
Sarah Coles, head of personal finance at AJ Bell, pinned much of the blame on mortgage rates, which had been rising since August. “Prospective buyers are taking one look at mortgage rates and fleeing for the hills.” This mortgage broker says now might just be the perfect time to buy.
Mike Staton, director at broker Staton Mortgages, said the market was suffering from a lack of confidence, affordability and lenders willing to lend. “Buyers are frightened to borrow, lenders appear frightened to lend, and the Government wonders why transactions are falling.”
Property specialists Savills warned that mortgage rates might stay above 5% throughout next year and into 2028, a less encouraging outlook than it had expected in June.
But Savills director of residential research Emily Williams didn't expect a house price correction. “Most homeowners have absorbed higher borrowing costs, while a relatively resilient labour market should keep forced sales low.”
Savills still forecast UK house prices would rise 15.8% over the five years to 2031, beating inflation, which it expected to rise by 9.8% in total over the period.
Houses were also expected to outperform flats, with demand for larger family homes supported by flexible working, while flats continued to struggle with “affordability constraints, building safety concerns and greater supply”.
So what should sellers do if their home isn't shifting? First, be realistic. Get several valuations, look at recent sold prices for comparable properties and don't simply choose the agent promising the highest figure.
Price competitively from the outset. Rightmove found that homes needing price reductions could take three times as long to find a buyer: an average of 119 days, compared with just 39 days for those sold without a reduction.
Finally, make your home stand out. In a crowded market, good photographs, tidy presentation and flexibility over viewings can all help.