Savills: Sellers remain resistant as price sensitive hits the property market

The gap between prime buyer and seller price expectations has widened, estate agents have warned, with the majority of buyers expecting to pay less for a property.

Analysis by Savills found 53% of its agents report that buyers now expect to pay at least 5% less for their new home.

That compares with just 13% who think sellers are prepared to lower their price expectations by the same amount.

The analysis by Savills also highlighted that as some vendors are choosing to hold out for the traditional spring market, a lack of stock has become more of a concern over the past three months, overtaking rising interest rates as a key issue for buyers.

Market uncertainty ranked as the top concern for prime London buyers this quarter, Savills said.

The research found that price growth in London prime markets held steady during the first quarter of 2023, up 0.1%, after experiencing falls at the back end of last year.

The prime regional market saw 1% price falls during the quarter, Savills said, but values fell at a slower rate than in the fourth quarter of 2022 when they were down 1.3%.

Annual growth also slipped into negative territory of 0.7% for the first time since September 2019 , down from a peak of 9.2% during 2021.

Frances McDonald, director of residential research at Savills, said: “While the London market has held steady over the past couple of months – realistic pricing continues to determine activity levels. 

“Demand has remained stronger than expected, but buyers are not feeling the same urgency that they felt last year, and are happy to bide their time to find the right home and at the right price. Higher price bands, especially £2m-plus, and best in class turnkey properties, are continuing to hold up more strongly.

“Prices are beginning to stabilise across the prime regional market, following almost three years of strong growth.

“While best in class properties are still commanding competition, and buyers are still prepared to pay more for the ‘right’ home, price sensitivity is creeping into the wider market.”