Rightmove has announced that over one-third (37%)* of sellers already on the market have reduce property prices since first listing. They also report that it’s the highest proportion at this time of year for five years.
Why are so many forced to cut property prices?
With the market struggling, the “autumn sale” is a result of existing sellers keen to sell before Christmas. This has led to the sales tactic of dropping property prices to attract those who want their dream home in time for a perfect Christmas.
Rightmove director and housing market analyst comments;
In the run-up to the festive season many sellers are trying to tempt distracted buyers to look at their property by dangling the bauble of more attractive pricing given the quieter time of year and more challenging market.
– Miles Shipside, Rightmove
With Brexit and the snap election, we have definitely seen a sense of uncertainty. More and more are becoming reluctant to risk purchasing property in the current climate.
More recently, the base rate was increased to 0.5% from its all-time low of 0.25%. This added deflation to an already struggling market. Having said that, Mr Shipside rightly reassures;
Buyers who are disappointed that rates are on the up after a ten-year break should note they are still historically very cheap.
– Miles Shipside, Rightmove
It’s not all doom and gloom
Let’s not panic too much. A decrease in new seller property prices is normal for this time of year. Rightmove adds that new-to-the-market sellers have trimmed the asking prices by a modest 0.8% (-£2,392)* which is the smallest that they have recorded in November since 2007. This seasonal slowdown is one that is to be expected during this period.
On top of this, many sellers and estate agents are listing properties with an over optimistic view of the market. Yes, the annual house price growth picked up to 2.5% in October according to the Nationwide House Price Index report**, but we are still not out of the woods 10 years on from the financial crisis. Russell Quirk, CEO of hybrid agency eMoov says;
It is likely that some sellers may have jumped the gun a bit and priced a little too optimistically as a result.
-Russell Quirk, eMoov
Furthermore, the base rate increase could be having an effect on the property market and you may ask, is your monthly budget about to be squeezed? But it’s important to remember that the increase will also have positive effects. For instance, we may see higher interest rates on savings accounts and a boost to strengthen the weakened pound.
Even though the market is yet to make a full recovery, it is resilient and beginning to regain momentum.
What are your options?
Of course, the property price cuts are only a concern if you are looking to sell. If you are looking to buy then there is a lot of scope to negotiate a good deal.
For those who are perhaps looking to downsize to access some more cash then there are other options if right now the market isn’t strong enough to sell at the price you had in mind. There may be the option to remortgage and although the base rate has increased some lenders have already said they will not be passing on the base rate rise to their customers. Or for those aged 55+ Equity release could also be an option to release some funds without moving. Take a look at Bower’s Quick Guide to Remortgaging vs. Equity Release.
*Rightmove house-price-index October 2017
**Nationwide house price index October 2017