A Reality Check for UK Home Sellers as Cautious Buyers Drive Price Adjustments

Sellers of residential properties in the UK are set to readjust their price expectations this year as cautious buyers continue to navigate the market, even with the backdrop of decreasing mortgage rates, say industry experts.

Roarie Scarisbrick, a partner at buying agent Property Vision, notes a shift in seller attitudes, acknowledging that extravagant transactions seen in more optimistic times are no longer the norm. 

The market is witnessing a correction in expectations rather than a decline in property values.

According to Hamptons, a significant 50% of homes sold in England and Wales in 2023 went for reduced prices, up from 32% in 2022. This marks a notable change from 2021, where only 31% of homes were sold following a price reduction, reflecting a 10-year low.

Buyers are successfully negotiating an additional average discount of 1.4% on properties that have been relisted at lower prices, signaling a more balanced negotiation landscape.

Robin Thomas, a consultant at Recoco Property Search, anticipates a challenging year for sellers as the market adjusts. There is a growing consensus that the gap between sellers' expectations and buyers' willingness to pay is likely to narrow.

Despite December's data from Halifax showing a third consecutive monthly increase in house prices, homeowners struggling to sell properties at inflated prices are realizing the need to recalibrate their approach to attract buyers.

Zoopla's head of research, Richard Donnell, emphasizes the importance of pricing properties correctly, advising sellers that what they think their property is worth may not align with its actual market value.

Buyers, who were previously deterred by high mortgage rates in 2023, are finding relief as rates have eased in recent months. Moneyfacts reports a decline in the average rate for a two-year fixed mortgage from 6.86% in July to 5.66%. Similarly, rates for a five-year fixed mortgage dropped from a peak of 6.37% in August to 5.28%.

Buyer demand, measured by inquiries to agents, saw a 14% increase in the first week of 2024, with the rebound being particularly strong in London and the south-east.

Zoopla's Scarisbrick observes that the current sentiment is that everyone wants to buy property but is also seeking a good deal.

Buyers are now scrutinizing not only the financial aspects but also non-financial details like planning permissions and lease agreements. Jo Eccles, founder of Eccord, notes that buyers are becoming more discerning, emphasizing the need for both the right price and meticulous attention to details.

In conclusion, the UK housing market appears to be experiencing a recalibration in 2024, with sellers adjusting their expectations, buyers becoming more strategic, and a renewed sense of optimism driven by improved mortgage rates.