As usual in November, sellers set more competitive prices in an attempt to find a buyer during the last months of the year. This monthly price drop is exactly the average of 1.1% recorded by Rightmove in November during the pre-pandemic years of 2015 to 2019, and should therefore not be considered in isolation as a negative indicator.
But there are signs that more existing sellers, whose properties were already on the market and unsold, are willing to follow their agents’ recommendations and lower their prices in order to achieve a faster sale.
The proportion of unsold properties that saw a price reduction increased only slightly, from 7.5% before the pandemic in October 2019 to 8% in October. However, it doubled from the 4% figure in the frantic October 2021 market.#
Buyer demand is still performing better than it was during the more normal market of 2019, but it is clear that we have returned to a much more price sensitive housing market after two years of a buying frenzy.
The plethora of predictions about what could happen to prices next year comes at a time when much remains uncertain, but what is certain is that the exceptional price growth of the past two years is unsustainable in the face of economic headwinds and increasing accessibility constraints.
Homeowners coming to market in the final months of the year tend to lower prices to entice buyers as Christmas approaches, and we’re hearing from agents that existing and new sellers understand that selling on the current market they must offer competitive prices.
During the market frenzy, many agents said they had to tear up property valuation rules due to bidding wars, but now they’re back in more familiar territory, and the right price of first shot is even more essential to ensure a quick sale. .
Rightmove’s Tim Bannister said: ‘The first-time buyer sector has seen the biggest surge in activity during the market frenzy of the past two years, but now faces the biggest challenges after the surge in rates. mortgage interest rates, although there have been signs over the past few weeks that rates and availability are beginning to stabilize. This is despite a record rise in the base rate last week, which was largely discounted by lenders. The decline in buyer demand from last year’s strong market is greatest in the typical first-time buyer sector, with demand down 26% from the same period last year , but still up 7% from this time in 2019.
“In the second sector, demand is down 17%, and at the top of the scale, there has been a drop of 15%. Overall, total demand is still 4% higher than in 2019, but 20% lower than in October last year, as continued financial uncertainty weighs on the market.
“The now significantly outdated mini-budget has accelerated the slowdown in market activity that we have seen since the summer, and we are now in another state of uncertainty as we await surprises or help in Jeremy Hunt’s fall statement on Thursday.
“The frenetic market of the last two years has turned into a more normal market, more abruptly and less smoothly than we had anticipated. Although many are embarking on moves, especially those whose purchase has already been agreed, it’s understandable that some people pause to think, and some shoppers decided instead to look to Christmas and join in the New Year’s jump in moving activities.
“There is a group that is ready and able to move and is waiting on the sidelines for more financial certainty. Then there is a group of first-time buyers or people hoping to trade who are already stretching themselves financially and who may have now seen their plans dashed. Importantly, there is not a glut of unsold properties and the average number of applicants for the low number of properties available for sale is still a third higher than it was in October. 2019, which helps prevent the whole price dropping more than usual at this time of year.
“The era of historically low interest rates and frenzied buying is over, which could give way to a more normal market that opens up potential opportunities for those who were discouraged from entering the frenzied market at the time. over the past two years.”