Asking price cuts show ‘early signs of price sensitivity’ 

The level of price cutting on agency listings has started to hit new highs.

Property Log, which is a Chrome extension that tracks price changes on Rightmove, revealed on its Twitter page this week that both Monday and Tuesday were record days for reductions on asking prices.

It said on Monday: “In the four plus years we have been running Property Log we’ve never seen a day like today.

“Expecting to break the record again tomorrow.”

This record was then broken again on Tuesday, according to Property Log.

Its findings have been echoed by Zoopla’s latest House Price Index that showed 6% of homes listed for sale saw their asking price adjusted downwards by 5% or more last month - the highest level since before the pandemic.

The portal said in its report: “Re-pricing is a seasonal trend as we enter autumn, however, given the economic backdrop and factors including rising energy prices and rising interest rates - we believe this is a clear sign of a return to more of a buyer’s market after 2 years of a red-hot seller’s market. 

“For sellers, this means there is more of an impetus to shift their mindset when it comes to asking price, and consider local market dynamics more closely as well as the potential types of buyer for their property in the local area.”

Zoopla said price adjustments are to be expected as the market shifts from conditions where demand greatly exceeds supply, adding: “We do not believe that this is a precursor for big price falls but an indication that the rate of price growth will start to slow more rapidly in the fourth quarter and into 2023 as buyers react to the rising cost of borrowing.”

Its research found that higher mortgage rates are reducing buying power, which it said could be damaged by as much as 28% if mortgage rates reach 5% by the end of the year, assuming buyers want to keep their monthly repayments unchanged.

To offset the hit to buying power, we believe that buyers have three options. 

The property website said buyers have three options, they can put down a larger deposit, allocate more of their income to mortgage costs, or adjust their budgets and consider buying a smaller property or purchasing in a cheaper area.  

It suggests the recent Stamp Duty changes will still support lower value markets and help first-time buyers in southern England, while the increase in the stamp duty threshold to £250,000 takes 43% of homes out of paying the property tax.

The index registered an 8.2% annual increase in property prices to £258,100 across the UK.

Richard Donnell, executive director at Zoopla, said: “Measures of housing market activity have been very resilient over the summer. A surge in home values over the pandemic and the rise of mortgage rates means we face a sizable hit to household buying power over the rest of 2022 and into 2023. 

“While the recent changes to Stamp Duty are welcome, supporting activity in regional markets and the first time buyer market in southern England, the increase in mortgage rates will erode much of the gains. Homeowners that want to sell their home this year need to price realistically and seek the advice of an agent on local market trends.”