The gap between the asking price and what a property eventually goes for is at its widest in five years, says Zoopla in its latest house price index.
It says that sellers are having to make an average concession of 4.5% – or £14,100.
“For context,” the report says, “the average UK home grew in value by £42,000 over the pandemic, suggesting sellers are forgoing, on average, 33% of their pandemic gains.”
On top of this, Zoopla says that housing supply is returning to normal levels, with the number of homes marked for sale up 60% on the year. And the average estate agency has 24 homes for sale compared to 15, which was the case a year ago.
The house price index’s top line data is that house prices in the UK rose by 5.3% on an annual basis in February, giving an average house price of £296,300.
This time last year, house prices increased by 8.6%.
Zoopla executive director Richard Donnell says: “Greater realism on the part of sellers is supporting housing market activity in the face of higher borrowing costs.
“Discounts to asking price have widened and while 4% to 5% discounts are manageable, if these were to widen further then this would point to a greater likelihood of larger house price falls.
“We believe the market remains on track for a soft landing in 2023 with modest price falls of up to 5% and one million housing sales.”
Hargreaves Lansdown head of personal finance Sarah Coles says: “Property is in the bargain bin, but it’s not necessarily heading for landfill. It’s worth bearing in mind that we’re not seeing new demand lows – we’re actually still ahead of interest levels in the two years before the pandemic.
“Mortgage rates have now dropped back significantly from the peaks in the autumn, and although they are still far more expensive than a year ago, the fact they’re on their way down could help rebuild some of the confidence crushed by surging rates at the end of last year. It’s unlikely to be enough to see the return of the sellers’ market, but it could help avoid catastrophic house price falls.”
