UK houses being sold at a discount as demand falls for tenth month in a row
Sellers are being forced to come down on the asking price to secure a buyer as mortgage rates are still keeping house hunters away.
In the below £500,000 bracket, 60% of properties were sold below the asking price in February, professionals told the Royal Institution of Chartered Surveyors (RICS).
For properties priced between £500,000 and £1m, the percentage being sold below asking price jumped to 71.5%.
The majority of the sales were within 5% of the asking price rather than anything significantly greater, the report said.
New buyer inquiries also declined – for the 10th month in a row.
Read more: UK average house prices fall by £8,500 from August peak
Tarrant Parsons, senior economist at Rics said: “The housing market continues to adjust to the tighter lending climate, with stretched mortgage affordability still weighing heavily on activity.
“Given the ongoing weakness in demand, house prices remain on a downward trajectory, and are expected to see further falls through the first half of the year at least.
“Going forward, near-term expectations suggest market activity will remain generally subdued over the coming months, although the latest survey feedback shows tentative signs that the ongoing decline in buyer inquiries is now moderating.”
The research is a monthly sentiment survey by RICS of chartered surveyors who operate in the UK’s residential sales and lettings markets.
Sarah Coles, head of personal finance at Hargreaves Lansdown said: “The report highlighted the impact of stretched mortgage affordability, and to make matters worse, there have been subtle changes in the mortgage market which could make life even more difficult.
Read more: UK construction sector up in February despite housebuilding slowdown
“After months of rates slowly falling from the peak, we have seen some of the most competitive deals pulled from the market.
“Rate expectations are shifting slightly, as there are growing concerns that higher inflation might last for longer than expected.
“This is moving the swaps market (which underpins mortgage pricing) very slightly, making it more expensive for mortgage lenders to price a fixed rate – so that some of the best deals are off the table.
“This hasn’t moved the dial on average rates yet, but is one to watch.”
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