Brokers Issue Warning Over ‘Cut Price’ Housing Market

Brokers are wanting that the recent Rightmove asking price index does not mean that sellers are necessarily in a position to accept lower offers.  

Rightmove says asking prices have seen their sharpest August fall since 2018 as sky-high mortgage costs put buyers under pressure. 

The portal says average new seller asking prices fell by 1.9 per cent, or £7,012, to an average of £364,895 this month.

But mortgage expert say the refusal of some sellers to lower their asking price is being driven by financial necessity rather than stubbornness.

Ranald Mitchell, director of independent mortgage broker Charwin Private Clients says: “Some sellers are simply not in a position to accept reduced offers, with debt secured to the hilt on their properties. Many people have built a lifestyle based on ultra-low rates and they are now in a corner."

And Clive Read, owner of Goldmanread brokerage, adds: “British households have taken on unprecedented levels of household debt while interest rates have remained so low. For some sellers, the only way out of this debt trap is achieving a certain price level for their house, which they may be unable to deviate too far from."

Meanwhile Darryl Dhoffer, founder of The Mortgage Expert, reminds sellers that they can mitigate the impact of reduced sales prices by negotiating hard on their next property: “For the home movers out there, everything is relative, so a sensible selling price means they can also negotiate a sensible purchasing price, and I would highly recommend working with reputable agents that understand this process.”

But Samuel Mather-Holgate of Swindon-based advisory firm Mather & Murray Financial, warns that sellers playing hardball could be hit harder financially: “Those that price competitively are more likely to sell their homes quickly and without needing to reduce and become involved in a protracted negotiation. Sellers who find it difficult to adjust expectations downwards could see a more negative outcome overall.”

Rightmove reports that new seller asking prices fell by 1.9 per cent this this month to £364,895. On a typical home that’s a fall of over £7,000 and is the biggest drop in August since 2018.

Even so these prices remain an average of £59,000 or 19 per cent higher than in August 2019 - that’s without taking inflation into account.

The number of sales being agreed is now 15 per cent lower than 2019. Meanwhile the number of available properties is still 10 per cent lower than at this time in 2019.

A Rightmove spokesperson says: “While a 1.9 per cent drop in just one month seems dramatic, it’s in part an expected seasonal drop as sellers coming to market realise that they have to compromise on price due to the traditionally quieter summer holiday period. 

“Our analysis shows that homes that are priced right the first time, rather than priced too high only to be reduced later, are not only more likely to find a buyer, but more likely to find a buyer quickly. 

“This supports local estate agent reports of a two-speed market, with some properties for sale being overpriced and at risk of going stale, and many competitively priced homes which are attracting multiple prospective buyers.”