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Data from the property platform Zoopla reveals that in the ongoing autumn selling season in the UK, house sellers are increasingly reducing their prices to secure deals. Over the past four weeks, discounts have risen to 4.2 percent from the original asking price, averaging £12,125 per property. This represents the highest level of discounts seen since March 2019.
This trend of sellers adjusting their prices coincides with the Bank of England’s recent decision to pause its series of interest rate increases. While stable borrowing costs may offer some relief to the property market, analysts believe that due to the expectation of high interest rates persisting for an extended period, further declines in house prices may be necessary before market activity rebounds.
Lenders reduced their interest rates during the summer, which eased the affordability challenges for homebuyers. According to Rightmove, the average five-year fixed mortgage rate currently stands at 5.54 percent.
Capital Economics, a consultancy, forecasts that borrowing costs will remain relatively high, and house prices will continue to decline until mid-2024, ultimately falling by approximately 10 percent from their peak in August 2022. House prices saw a year-on-year decrease of 4.6 percent in August of this year, the most significant drop since 2009, as reported by Halifax.
Some agents initially overprice properties to secure listings, and those properties that don’t generate immediate interest are more likely to require price reductions. However, a greater proportion of high-end properties are being sold off-market, where price reductions are less common.
Zoopla reported that homes in London and the southeast of England saw the most significant discounts. Despite an increase in demand and sales as the typically busy September and October selling season begins, Zoopla expects the number of house sales to end the year approximately 20 percent lower than the previous year.
In summary, the UK housing market is currently witnessing a notable trend as sellers are increasingly reducing their prices to attract buyers. According to data from Zoopla, discounts have reached 4.2 percent from the original asking price, the highest level since March 2019. This development coincides with the Bank of England's decision to pause interest rate increases, providing some stability to borrowing costs. However, analysts anticipate that the market may continue to experience price declines due to the expectation of prolonged high-interest rates.
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