House Prices Offer Best Discounts in Four Years, Luring Buyers Back
Having been involved in property for over 35 years, I have always looked back and taken note of those that decided to enter the market during times and trouble with admiration. I am proud to say that during these times the advice I have given based on a clients circumstances has always risen to the top.
Agreed, investing in anything when everyone is screaming don't do it, takes bravery but property is not a normal investment, people do not realise that there are certain factors in the property industry that will butt against any downward trend. Significant short term returns can be made in property if you are investing in the right property, in the right location and most importantly at, the right time. So, do you stick, or twist?
The allure of the property market has been reignited for potential buyers with the most considerable discounts on home prices seen in the past four years.
Currently, properties are getting off the shelves at an average of 4.2% less than their listing price, translating to a dip of £12,125. This is based on data from the renowned property platform, Zoopla.
The month of September showcased the apex of these discounts since March 2019, a phenomenon that can be attributed to the recent surge in mortgage rates.
Although September saw a 12% upswing in buyer activity, the market dynamics still seem to favour them as they're not yielding to inflated price demands.
This environment continues to be a paradise for buyers, evidenced by an 80% increase in the property listings compared to September of the previous year.
London and its south-eastern neighbours lead in terms of price reductions, with homes selling at 4.8% less than their asking prices. For the rest of the UK, this discount stands at 2.8%, as indicated by Zoopla.
This trend of increasing discounts, which began in summer, has nudged house prices downward. The overall decrease over the year amounts to 0.5%.
Zoopla highlighted this as the inaugural annual price dip since 2012 and projected a further 2-3% decline by year-end.
When focusing on regions, the South East and Eastern zones, which are among the country's priciest, have seen the steepest fall, registering at 1.5%.
Conversely, Scotland is outperforming, with its house prices, which are 40% below the national average, marking a 1.6% annual growth.
Richard Donnell, the research executive director at Zoopla, commented, "A slight drop in prices hasn't made homes significantly more affordable. The anticipated decrease in mortgage rates over the next year or so seems like the best bet for rejuvenating buyer interest."
The market has observed a decline in fixed mortgage rates, stemming from dwindling expectations about interest peaks. Several lenders are now jumping on the bandwagon, offering five-year fixed rates under 5%. Furthermore, Zoopla is optimistic about these rates dwindling further to around 4.5% in the near future.
Financial analysis by Moneyfacts indicates a current average 2-year fixed mortgage rate of 6.53%, with the five-year average rate standing at 6.03%.
Despite these soaring mortgage rates, which curtail buyers' purchasing power by 20%, their preferences in terms of property size remain unchanged, as reported by Zoopla.
Although demand is 33% weaker than the previous year, it mirrors the 2019 levels, signalling a halt to the real estate frenzy triggered by the pandemic.
Even if the prices go down by 2-3% this year, they'll still tower 17% above the pre-Covid era.
An optimistic perspective on mortgage rates is the catalyst behind buyers' rejuvenated interest in the property market, as per Zoopla.
Post the August bank holiday, estate agents have recorded a 12% uptick in inquiries.