Home Buyers Get £18,000 in Average Discount Amid High Home Sales Numbers

Sellers are realistic about home prices and discounts, while potential buyers are motivated by forecasts of lower interest rates over the course of 2024.
Home Buyers Get £18,000 in Average Discount Amid High Home Sales Numbers
Terraced houses in southeast London on Jan. 13, 2023. (Daniel Leal/AFP via Getty Images)
Evgenia Filimianova
11/28/2023
Updated:
11/28/2023
0:00

Home buyers are securing an average of £18,000 off their next home amid a six-year high in home sales in the UK, a price index has revealed.

Zoopla’s latest House Price Index showed a strong buyers market, caused by high mortgage rates affecting demand and more supply boosting negotiating power.

In November, sellers were accepting 5.5 percent off the asking price to agree sales. This is the largest gap for over five years and compares to a 3.4 percent average discount in the first half of 2023.

“This is being keenly felt in the south of England where the average discount to the asking price for sales is 6.1 percent in London and the South East - equating to a total reduction of £25,000 off the asking price,” Zoopla stated.

For the rest of the UK, the discounts for agreed sales are at 4.8 percent, or £11,000. In contrast, the discounts were at as low as 0.6 percent in 2022 and 1.1 percent in 2021.

“These are the best conditions for home buyers for some years with more homes to choose from and with sellers more prepared to negotiate on price to agree a sale,” said Richard Donnell, executive director at Zoopla.

He added, however, that average house prices were still £41,350 higher than the start of the COVID-19 pandemic. Mortgage rates also remain historically high, despite the recent vote by the Bank of England (BoE) to hold the interest rate at 5.25 percent.

The BoE’s September decision to hold the interest rate broke a spell of 14 consecutive rises in almost two years.

However, many mortgage holders are yet to experience the impact of the bank’s two-year-long cycle of interest rate hikes. Those due to reach the end of their fixed-rate deals will have to pay higher bills in line with the high interest rate.

Sales Volume

In addition to discounts, there is also more choice for potential buyers, with 34 percent more homes for sale compared to a year ago. An average estate agency branch now has over 31 homes for sale, compared to just 14 in the middle of the pandemic.

Sellers are realistic about home prices they set and the allowed room for negotiation, Zoopla also noted. There is a “growing sense” among would-be movers that the BoE will not be raising interest rates and an expectation of lower rates in 2024.

This contributes to the steady volume of sales, the report said.

The total volume of agreed sales is currently 15 percent higher than this time last year, and 5 percent up on 2019 levels. This is despite a weaker buyer demand, at 13 percent lower than in 2019.

Commenting on the market outlook, Mr. Donnell said that the growing sales market was a “positive sign.”

“This indicates that house prices do not need to post bigger falls to get people moving but sellers need to be ready for more negotiation on price,” he said.

New sales are expected to slow in the run up to Christmas, with some sellers taking homes off the market to relaunch in the new year.

By the end of the year, Zoopla estimated 1 million sales to be completed. However, parts of Scotland and inner London will still underperform in sales, which reflects market activity in recent years.

While higher mortgage rates have affected buying power, they haven’t lowered house prices in the capital.

“London is consistently the highest value UK property market, so it is less susceptible to the market fluctuations seen elsewhere in the UK. This means London’s homeowners are well-positioned to capitalise on the upcoming bump we see annually from Boxing Day and into the new year,” said the CEO of Foxtons, Guy Gittins.

He advised potential buyers to utilise the market data in order to benefit from the new year sales surge.

Evgenia Filimianova is a UK-based journalist covering a wide range of national stories, with a particular interest in UK politics, parliamentary proceedings and socioeconomic issues.