Zoopla: Property hits the bargain bucket – 5% discounts spike

Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the publication of the Zoopla House Price Index, showing property hits the bargain bucket – 5% discounts spike.

Key points from publication:

• • 42% of sellers are accepting offers over 5% below the asking price – the highest number in five years. Meanwhile 15% are accepting offers 10% lower than asking. The average discount has hit 3.8%.
  • There are 14% fewer buyers than a year earlier and 18% more properties coming to the market than the five-year average.
  • House prices are up 1.2% in a year, but annual house prices are set to turn negative in the second half of the year – with a 5% fall by the end of 2023.

Sarah Coles says:

“We could be piling properties high and selling them cheap in the second half of the year, as mortgage misery throws houses into the bargain bucket.

“Two in five sellers have had to accept an offer that’s at least 5% below the asking price to secure a sale, while an alarming 15% have had to accept a 10% discount – or more.

“And if rates stay higher for longer, this could just be the start of it.

“A huge number of today’s buyers will have locked in a mortgage before rates started to rise through the roof. As a result, sales held up at 8% above the five-year average.

“However, demand is already down 14% in a year, and as the impact of mortgage rate hikes feeds though into sales, we can expect this to intensify.

“A rise from 4% to 6% cuts buying power by 20%, which is going to take a toll.

“It’s also worth keeping a close eye on the number of properties being put up for sale.

“Supply is starting to grow faster, and 18% more homes hit the market in the previous four weeks than the five-year average.

“As borrowers face the horror of remortgaging at a much higher rate, they’re weighing up their options.

“The government is hoping to stem a flood of forced sales by making it easier for people to make short-term mortgage changes in order to bring monthly costs down.

“It remains to be seen whether this is enough, or whether higher rates for longer are enough to persuade people they need to downsize. 

“More forced sales could make Zoopla’s prediction of a 5% price fall start to look fairly optimistic.”

Kindly shared by Hargreaves Lansdown

Main article photo courtesy of Pixabay