A key player in the housing market has said it expects asking prices to track around 1% lower nationally by the end of next year, as the market continues to normalise after post-Covid freneticism.
Sellers will likely have to price more competitively to secure a buyer next year and agents will have to work harder especially when it comes to first-time buyers as affordability remains stretched, according to Rightmove (RMV.L).
“The housing market is made up of thousands of local markets, each with their own unique dynamic of supply and demand,” said Rightmove’s property expert Tim Bannister. “In areas with more discretionary sellers and fewer homes for sale, we may see new seller asking prices remain flat, or even very slightly increase compared to this year.”
The platform thinks mortgage rates will become more predictable — but remain high, meaning middle-market and lower end buyers will struggle. The average two-year fixed rate is now 5.52% and average five-year rate is 5.11%.
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The real estate platform used a predictive model to forecast, based on millions of supply and demand pricing data, as well as a panel of experts.
A year ago, it predicted average new seller asking prices would drop by 2% in 2023, and they are currently 1.3% lower year-on-year.
Looking back at this year, the average time for a seller to find a buyer has jumped from 45 days to 66 days. Meanwhile, some monthly price falls have been greater than the usual seasonal trends this year.
The level of price reductions has increased during 2023, with 39% of properties now seeing a price reduction during marketing compared to 29% last year, and 34% in 2019. New sellers will need to compete with their cut-price neighbours, and work with their agent to start their marketing with a competitive price, rather than starting too high and needing to reduce later.
Research shows that pricing right at the outset maximises the initial impact among local buyers and gives new sellers a much greater likelihood of a successful sale.
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Buyers are much more likely to see a choice of homes for sale in their area that suits their needs compared to the stock-starved pandemic years, Rightmove said. Buyers coming to market in 2024 are in a strong position to negotiate on price and take more time to choose the home that’s right for them.
However, the number of available homes for sale has only just increased to pre-pandemic levels and there are no signs of a wave of new listings which would create a glut of homes for sale. With more choice and fewer buyers on the ground, it will be those sellers who are willing and able to price temptingly who will attract buyer’s attention.
Meanwhile, UK house prices rose in November in the third consecutive monthly increase as the market now expects interest rates to start coming down. The average cost of a home rose 0.2% in November from the month earlier to £258,557, Nationwide Building Society said on Friday. From a year ago, prices fell 2%, which was the strongest reading in nine months.
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Earlier last week Zoopla published its house price index for November showing houses were being sold at steep discount. In London properties are selling for £25,000 less than the asking prices, while in the rest of the country sellers were lowering prices by £18,000.
