"In a market that agents describe as the most price-sensitive ever, buyers are likely to be on the look-out for homes that they feel represent excellent value, and to attract one of these motivated buyers, sellers need to price right first time"
- Tim Bannister - Rightmove
According to the latest market analysis by Rightmove, average new seller asking prices were up by 0.5% (+£1,950) this month to £368,231 - the smallest average asking price increase at this time of year since 2008, and well below the historic norm in October of 1.4%.
However, despite this more muted rise in average asking prices, buyer activity levels remain significantly lower than during the post-pandemic market frenzy. The number of sales being agreed is now 17% below this time last year, with the proportion of homes finding a buyer and being marked Sold Subject To Contract dropping from an average of eight in ten at the height of the frenzy, to six in ten now.
Buyers are still active for the right property at the right price, but agents advise that sellers need to capture a buyer’s attention with a competitive price from the first day of marketing. Rightmove analysis shows that starting too high and reducing later seriously damages the chances of a sale, though many sellers appear to be struggling to adjust their pricing tactics to help them sell in this more challenging market.
Tim Bannister Rightmove’s Director of Property Science comments: “New seller asking prices have seen a rise, as they usually do at this time of year following the summer holiday season.
"While this year’s much more subdued rise indicates that some new sellers are gradually heeding their agents’ advice to price competitively, agents report that other sellers still need to adjust their expectations on the price that they are likely to achieve in the current post-pandemic, lower-activity market, where six in ten homes are now selling rather than eight in ten.
"In a market that agents describe as the most price-sensitive ever, buyers are likely to be on the lookout for homes that they feel represent excellent value, and to attract one of these motivated buyers, sellers need to price right the first time.
"If similar nearby properties for sale appear overpriced, serious sellers have an opportunity to stand out from the crowd with a more competitive price and attract immediate buyer interest that our research shows significantly increases the likelihood of finding a buyer.”
The number of buyers enquiring about each available home for sale is still 8% higher than at the same time in pre-pandemic 2019. If a property for sale receives its first buyer enquiry on the first day of marketing rather than after two weeks, then Rightmove data shows that a property is 60% more likely to find a buyer and be marked Sold Subject To Contract.
Agents report that creating this immediate momentum is critical and that the most successful sellers are those who stand out as they are pricing most competitively against similar properties for sale.
Accurately priced properties succeed in finding a buyer in less than half the time that it takes those that need a reduction, and when they do find a buyer the sale is also 50% less likely to fall through. This highlights the importance for serious sellers of working with a local estate agent to get the price right the first time, rather than testing a higher price and mistakenly thinking that they can just reduce later without damaging their chances of a sale.
A more stable mortgage market is providing some home-movers with more confidence about what they are likely to be able to afford, even with rates remaining well above the ultra-low levels of recent years.
The average two-year fixed rate is below 6% for the first time since June, and average two-year and five-year mortgage rates are both now lower than at this time last year during the post-mini-budget period.
In the last year, the average house price-to-earnings ratio has also decreased by close to 10%, meaning that buyer affordability, while still stretched, has improved compared to this time last year. Meanwhile, average fixed mortgage rates continue to trend downwards and have now fallen for 11 consecutive weeks, with the average five-year fixed rate dropping from 6.08% to the current 5.43% over that period.
The cheapest available rates in some Loan-To-Value (LTV) brackets are now below 5%, with rates in other LTVs edging closer to sub-5%.
Mr Bannister concludes: “Mortgage rates continue to trend in the right direction and have now dropped for 11 consecutive weeks, with buyer affordability gradually improving compared to this time a year ago.
"Those with a larger deposit have seen the biggest benefit from recent rate drops, with rates for those with a smaller deposit, typically those further down the housing ladder, not dropping as quickly. The mortgage market is much more stable right now compared to three months ago, giving movers a little more assurance over the rate they are likely to be offered and therefore what they are likely to be able to afford.
"Those looking to secure a new home for the new year should apply for a Mortgage in Principle to work out what they could afford, and listen to local estate agents about what’s happening in their local housing market.”
Matt Thompson, head of sales at Chestertons, says: “An increasing number of London house hunters resumed their property search after the Bank of England announced that interest rates remain at 5.25%. The uplift in buyer confidence continued throughout October as we registered more buyer enquiries and higher volumes of property viewings being conducted.
“Further boosting October’s market activity is the fact that we have now entered the last few months of the year, with many buyers wanting to find a property before the festive season. As a result, the market is becoming more competitive again with some properties receiving multiple bids by several buyers.”
