People selling their home have had to settle for an average of 3% below their asking price in recent weeks. This is in contrast to much of 2021 and the first half of this year where property mostly matched asking price.
According to figures from Zoopla, house price growth has now dropped to 0.7% across the last three months, which is the lowest level since February 2020.
The market is still feeling the effects of September’s disastrous mini-budget, which drove mortgage rates sharply higher, led to hundreds of deals being pulled from the market and causing demand for property to plummet by 44%.
New sales in previous hotspots have dropped by up to 50% where these higher rates hit buying power the hardest – southern England, east Midlands and Wales. However, sales in more affordable areas have fallen less.
With the current cost of living crisis leaving people more conscious of their budgets, and with a prolonged recession on the horizon, Zoopla is predicting that the housing market will continue to slow with prices likely to dip in the first six months of 2023. It expects property values to drop by up to 5% over the year, with total sales volume to fall to 1m from 1.3m.
Richard Donnell, executive director at Zoopla, said: “The housing market is adjusting to a reset in the level of mortgage rates but the likelihood of double-digit house price falls at a UK level remains low.
“While the outlook for house prices is weak, we see a shift to more needs-driven motivations to move in 2023 and beyond which will support sales volumes. Ongoing pandemic impacts, increased labour market flexibility plus more retirement will continue to encourage moves. Cost of living pressures will compound these trends encouraging homeowners to consider their next move.”