Agency stock shortage helps close gap between asking and sold prices

The lack of agency stock for sale has pushed the gap between asking and sold prices to record lows, research claims.

Research by London agent Benham and Reeves compared mortgage approved house prices from Nationwide and Halifax with Rightmove listings and Land Registry data.

It found that the average mortgage approval price hit £269,769 during the first quarter of 2022 while the typical asking price was £348,129 – a 29% difference.

That is the smallest gap recorded since Benham and Reeves began its research in 2018. 

The gap is down from 32% this time last year.

In London, the gap between mortgage approved and asking prices was 26% in the first quarter of 2022, down from 27.8% a year ago.

When Land Registry sold prices are added to the mix, the research found that buyers are paying £277,287 on average, a 20% gap on asking prices, also the lowest on record for the agent.

The gap was found to be smaller in London at 19.7%.

Marc von Grundherr, director of Benham and Reeves, said: “Despite a string of interest rate hikes, UK homebuyers continue to make hay while the sun shines, with mortgage approved house prices climbing yet again in 2022. 

“At the same time, asking prices have also increased but they haven’t done so with the same gusto. 

“As a result, this continued optimism from the nation’s buyers means that the gap between what they are borrowing and the notoriously ambitious asking price expectations of UK sellers is now at its smallest since we began our records back in 2018.

“But while buyers continue to swamp the market at mass, the challenge facing them is a severe lack of available stock and this is having a notable influence on the market reality gap between asking prices and sold prices.

“Sellers will always overprice when entering the market in order to leave a little room to do the dance during the negotiation stage. Although they continue to do so, they are finding that buyers are willing to come up that bit more than they previously have in order to secure a property.

“This has caused the gap between asking prices and sold prices to narrow to its lowest on record.”