The latest Zoopla House Price Index for June has just been released, and it reveals some interesting insights about the UK housing market. As one of the most trusted sources of housing data, the Zoopla House Price Index provides a valuable window on the current trends in house prices and buyer sentiment. Whether you’re looking to buy or sell a property in Chelmsford join us in exploring the key takeaways from the report.
Strengthening of a buyers’ market in the first half of the fiscal year
According to Zoopla’s June House Price Index, the property market has shifted to become a buyers’ market in the first half of this fiscal year. There are currently 14% fewer buyers in the market over the last four weeks than the average over the last five years. Those buyers seeking to purchase a property right now seem to be committed, as the number of sales agreed is currently 8% above average.
Higher mortgage rates on buying power have made homes less affordable, making it difficult for buyers to find a property that meets their budget. It’s worth noting that the most expensive markets, and those where prices have risen the most in recent years, are likely to experience future price falls.
Zoopla’s June House Price Index also indicates that the East of England, South West, East Midlands and South East are areas where it appears house prices will need to adjust the most. As such, property buyers are advised to remain cautious and be open to exploring other regions with more realistic pricing spreads.
Realistic pricing spreads
Mortgage rates and cost-of-living pressures are causing buyers to drive a harder bargain in the current property market. According to the Zoopla House Price Index, this is resulting in a significant increase in the number of sellers who are willing to accept discounts on their properties. In fact, 15% of sellers (that’s over 1 in 6) are accepting discounts of over 10% off the initial asking price.
What’s more, sellers are having to accept offers that are 3.8% below the original asking price, on average. This is a clear indication of the growing power of buyers in the market, as they are able to push for more favourable terms in a market that is becoming increasingly competitive.
It’s not just a matter of price, either. The cost of living pressures are also playing a significant role, as buyers look for properties that offer better value in terms of location, space and amenities. This is forcing sellers to be more realistic with their pricing spreads, as they attempt to attract buyers who are looking for good deals.
Interestingly, the trend is not limited to individual cases. The Zoopla House Price Index has revealed that 42% of sellers are having to accept offers that are more than 5% below the asking price, which is the highest level since 2018. This is yet another indication of the increasing influence of buyers in the current property market.
Overall, the message is clear: realistic pricing spreads are becoming more important than ever in the current market. Ultimately, the key to success in the current market is to be flexible, realistic and willing to work with the changing trends.
Testing time due to mortgage rates
One of the factors that have contributed to the strengthening of a buyers’ market is the rise of mortgage rates. According to Zoopla’s June House Price Index, mortgage rates have increased by over 1%, averaging between 5% and 6%.
These increased mortgage rates have a significant impact on the housing market, particularly on house prices and sales volumes. Zoopla reports that 5% mortgage rates represent a tipping point, beyond which house prices will post annual price falls with lower sales volumes.
As we approach this tipping point, the current report suggests that the housing market is in for a testing time. The property market is undergoing significant changes despite these challenges, it is predicted that there will be a downward trend in house prices for the rest of the fiscal year, with a forecast for price falls of up to 5% in 2023.
While it may be challenging to navigate through these changes, there is a silver lining for potential homebuyers.
Richard Donnell, Executive Director at Zoopla, says: “The resilience of the housing market and homebuyers is set to be tested once again as mortgage rates increase over 5%. Mortgage rates falling to 4% earlier this year supported a rebound in sales and led to house prices registering small month-on-month gains.
“Modest price falls will resume in the second half of 2023 as the supply of homes increases giving buyers more choice and room for negotiation on price. We still expect house prices to be 5% lower over 2023 and there is a very substantial equity buffer to absorb price falls which are likely to be concentrated across southern England. Demand for homes remains but those households looking to move home in 2023 need to be very realistic on pricing and get the view of agents on where to pitch their asking price to secure a sale.”
For local specific insight
The Zoopla House Price Index gives us a real insight into what is happening on a national level. If you would like to understand what the successes and challenges within the Chelmsford property market, contact our Charles David Casson team on 01245 835859.