Buyers are returning to the market as interest rates and mortgage rates decline, mortgage affordability assessments have eased and the initial lull following April’s stamp duty changes has ended. But, according to the latest Rightmove House Price Index, realistic pricing is more important than ever to secure a sale in today’s market.
Its June research shows that new seller asking prices dropped by 0.3% to £378,240 compared to the previous month as new sellers lowered prices to attract buyers. This is due to several reasons.
Increased supply
Agreed sales remain strong, with May generating the highest number of agreed sales in any month since 2022 and 6% ahead of the same time last year, despite the stamp duty changes. Buyer demand is up 3% on the same time last year. But demand remains outstripped by supply, with the number of properties coming to market 11% ahead of last year according to Rightmove. Meanwhile, research from Zoopla suggests that the average estate agent has 35 unsold homes on their books.
Regional variances
There are significant differences in house prices by region. In June, the price drops were even more significant in higher-priced southern regions where the stamp duty changes impacted the most. By contrast, prices rose fastest in the likes of the North West, Wales and Yorkshire & The Humber.
Agreed sales are consistently below asking price
Homes are also consistently being sold below the average asking price. Zoopla’s most recent data suggests sales prices are being agreed at 3% (or £16,000) below the asking price and Zoopla says this figure has been stable for some months.
The need to price realistically
Such factors make it vital that sellers price realistically, especially with additional homes expected to come to market over the rest of the year. Sellers also need to pitch prices to entice buyer interest early for a successful, prompt sale. Rightmove’s research shows that homes which attract an enquiry on the first day of marketing are 22% more likely to find a buyer than those which take more than a fortnight to generate their first enquiry. Similarly, the company says that properties are 10% less likely to go under offer if the price is reduced, while time spent on the market and the likelihood of a sale falling through both double when price reductions take place.
Understand the wiggle room
Adding in a level of wiggle room is sensible. Buyers will often try to negotiate on their offers and a 3-5% premium offers them the chance to do that, without being out of kilter with the market as a whole. But sellers also need to remember the wide choice of homes available to buyers, which means that ultimately, it’s buyers who control the price paid.
Is it worth the money?
Buyers will also judge a property’s true value, often dependent on local competition, nearby amenities and key features such as energy efficiency. Sellers will assess the worth of a property by collating valuations from a selection of agents, while buyers will concentrate on actual selling prices. Only then does the true value of a property become evident.