Tue 12 Dec 2023
The real estate landscape in the current year has exceeded expectations, showing a more resilient performance than anticipated. Despite concerns about potential declines in asking prices, the market has experienced a mere 1.3% year-on-year decrease in average new seller asking prices, currently hovering just above £362,000 for homes in Great Britain. However, the surge in mortgage and interest rates has led to a strain on the affordability of prospective movers.
A year ago, the Rightmove forecast predicted a 2% drop in average new seller asking prices for 2023, but the current figures reflect a more modest decline. Looking ahead to 2024, Rightmove anticipates a 1% national decrease in average new seller asking prices as competition intensifies among sellers seeking buyers.
Tim Bannister, Rightmove's property expert, comments on the market's outlook: “While the coming year is expected to be relatively subdued, the unexpected robust activity this year indicates that buyers are actively addressing their housing needs. Rightmove's projection of a modest 1% fall in new seller asking prices for 2024 is grounded in the sustained demand at the right price, making a significant price drop unlikely."
Rightmove's forecast relies on comprehensive market data, including millions of data points on supply, demand, and pricing, combined with insights from estate agents and a panel of Rightmove experts. The local dynamics of each housing market in Great Britain contribute to variations in the predicted fall in new seller asking prices, with some areas likely to experience flat or slightly increased prices.
“In regions where sellers face challenges attracting buyers due to affordability issues or urgency to sell, competitive pricing is expected to be even more pronounced,” adds Tim.
For those planning to sell in 2024, pricing is highlighted as a critical factor. Compared to the more normal market of 2019, the level of agreed sales is currently 10% lower. Additionally, this year has witnessed a 39% rate of properties with asking price reductions during marketing, a notable increase from 29% last year and 34% in 2019. The average time for a seller to secure a buyer has risen from 45 days to 66 days over the past year, emphasizing the importance of competitive pricing for a quicker sale.
Mortgage rates, which have steadily declined since July, offer more stability and predictability for home-movers compared to the volatility experienced a year ago. The average two-year fixed rate is now 5.52%, and the average five-year rate is 5.11%. Despite the improvement, affordability remains a concern for many buyers, with the Bank of England indicating that Base Rate cuts are not imminent.
While there is a more significant inventory of homes for sale in 2024 compared to the pandemic years, there is no indication of a surplus that could flood the market. Buyers are in a favorable position with more choices and negotiating power. However, sellers willing to competitively price their homes are likely to attract buyer attention in this evolving real estate landscape.
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