Price reductions rise but sellers aren’t giving up

Agents are facing challenges of rising price reductions but fewer listings are being withdrawn and the level of fall-throughs is dropping, new data suggests.

A second quarter market report from Spectre claims the housing market is facing challenges from economic uncertainty, rising inflation and cost of living pressures but the brand insists there are still positives to be found.

The analysis shows a 49% increase in price reductions compared with the five year average for this time of year and a 16% quarterly rise.

Spectre suggested part of this could be due to seasonality and highlighted that year-to-date reduction volumes are within 1% of 2019 figures.

The report said: “It could be argued we're continuing to shift towards a more normalised market compared to the exceptionally active market of recent years alongside the lingering effects of overpricing.”

Spectre highlighted that 24% of reductions so far this year have had more than one price drop, which it attributed to the knock-on effects of overpricing are still impacting a seller’s ability to find a suitable buyer.

The report said: “Economic pressures may also be leading to a shift in consumer mindset where finding a bargain is becoming increasingly important, all culminating in sellers having to lower their expectations in order to sell their property. 

“The shifts in price reductions further signify a return to pre-pandemic levels as the market continues to normalise rather than decline. Though quarter three can expect another seasonal increase, levels may remain within those previously seen.”

Fall-throughs were also up 5% in the second quarter against the five year average but are down 10 percentage points on last year’s figure Spectre said, while the level of listing withdrawals has declined 20% compared with the typical activity for this period over five-years.

Meanwhile the number of new listings is up almost 4% and sales agreed has increased by 3% compared with the five-year average for the second quarter.

Spectre is predicting a 2.5% increase in new agency listings over the third quarter, adding: “People are cautious and therefore some are putting off buying a home until they can comfortably afford it. 

“This is likely to continue to be the case in the year ahead, as inflation remains high and interest rates rise.

“Estate agents will need to continue working hard to understand the market and relate to their clients in order to maintain a healthy cash flow until we see inflation subsiding.”

Heather Staff, co-founder at Spectre, said: “Our data shows the market is starting to calm down after quite a turbulent year, stemming from economic uncertainty, rising inflation, and cost of living pressures.

“Last year saw more competition between buyers, with over-inflated prices and high demand leading to rushed or over-budget offers - which eventually converted into buyer regret and rejected mortgage applications.

“What we’re now seeing is a slower, slightly calmer market, giving buyers the opportunity to fully consider their offers before applying for a mortgage and reducing the likelihood of a sale falling through.”