Home sellers will have to cut the price of their properties or work harder on promoting them if they want to get them sold, a new report suggests.
Property listing website Rightmove said a wave of fresh homes coming to market is helping to push asking prices down, as a growing disparity between sellers and buyers’ price expectations adds to the usual summer slowdown.
The average house asking price fell by 0.1 per cent, or £248 to £309,191 between June and July, down from a 0.4 per cent rise the previous month, according to Rightmove.
Oversupply: Estate agents have the highest proportion of homes for sale since 2015
On an annual basis, asking prices still rose by 1.4 per cent, down from 1.7 per cent in June – and they are still at their highest in five years, data shows.
Buyers, however, are increasingly refusing to buy at the advertised price as a third of properties currently for sale have been reduced at least once since they first came to the market, according to the report.
This seems to be a trend set to continue into the summer as last month there was an 8.6 per cent jump the number of properties put up for sale, but no corresponding increase in the number of buyers – leaving estate agents with the highest proportion of homes for sale since 2015.
It means that in areas where there’s oversupply, buyers are going to have to lower their prices and work harder on the presentation and promotion of their property if they want to sell it, Rightmove said.
‘At this time of year many potential sellers are more focused on erecting sun umbrellas as opposed to ‘For Sale’ signs, and would-be buyers are equally distracted by their summer holidays,’ said Rightmove director and housing market analyst Miles Shipside.
‘Prospective buyers will need tempting with a summer special price or a beautifully finished and presented must-have home, and sellers whose homes tick these boxes then need an estate agent with good marketing skills to promote it effectively,’ he added.
Asking prices may have declined monthly but are still at their highest for five years
Sales transactions were also virtually flat at -0.2 per cent compared to last year, although Rightmove noted they were ‘holding up well’ considering the uncertain political background and stretched buyer affordability.
Shipside said that, in fact, there were signs that activity was improving as the year progressed, with sales agreed in the year to date down 3.9 per cent, an improvement from a 5.4 per cent decline in the same period last year.
The situation, however, differs greatly from region to region, with London and the South showing the biggest fall in transactions and northern regions the smallest.
‘Most regions in the middle and north of Britain have brisk market conditions where buyers eagerly soak up extra supply of suitable property coming to market, and where there is enough momentum to support an increase in prices,’ Shipside said.
‘With less momentum further south, any increase in property coming to market often leads to more property choice and gives buyers more negotiating power.
‘Whilst stock levels are very limited in the brisker market locations, from a national average perspective as we enter the summer holiday period the total stock per estate agency branch is at the highest level for nearly three years.’
The difference in the decline in transactions is strictly linked to affordability, as a separate set of data for England and Wales by LSL Property Services and Acadata shows.
The five most affordable areas in England & Wales are the North East, the North West, Yorkshire and the Humber, the West Midlands and Wales, the report said, which are also the regions showing the smallest decline in transactions.
North West saw the smallest decline in sales transaction – down 1 per cent compared to last year – followed by Yorks & Humberside, where transactions were 2 per cent lower, West Midlands 3 per cent lower and East Midlands 5 per cent lower.
Meanwhile, areas with the greatest reduction in transactions are all based in the south of England, where buyers’ affordability is stretched and the stamp duty increases are having the greatest impact.
The biggest falls were recorded in London and the South East, where transactions were down 11 per cent and 8 per cent respectively in the three months to May compared to the same period last year.
The decline is even more marked compared to 2016, although the report notes that was when the stamp duty increase was introduced, resulting in a higher number of transactions being brought forward.
The chart shows the number of properties sold per month in England & Wales
Brian Murphy of the Mortgage Advice Bureau, commenting on Rightmove figures, said: ‘This month’s report suggests that asking prices have flattened in many parts of the UK, partly as a result of the distractions of sunshine and major sporting events, but also as the disparity grows between what vendors believe their property is worth at first listing, and what the market will actually stand.’
He added: ‘[…] Properties will only sell if the price is right, and the Rightmove report suggests that asking prices are still in the region of being at their highest for five years. Against that context, vendors would perhaps be well advised to be realistic about their expectations. This isn’t just to ensure that they attract a buyer within a reasonable period of time, but also to avoid the issue of the property being undervalued at mortgage survey stage.
‘As it stands, consumer confidence currently appears to be holding steady, despite ongoing Brexit headlines, which stands us in good stead for the next couple of month across the height of the summer holidays.’