House sellers hold firm on asking prices despite mortgage squeeze and falling number of buyers

By Harry Glass and Simon Lambert

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Home sellers are standing firm and say they are less likely to lower asking prices than they were three months ago, despite the mortgage squeeze that has seen rates rise and stamp duty return for first-time buyers.

Property website Zoopla found that sellers are holding firm in the face of the withdrawal of the stamp duty break for first-time buyers - and the hike to 7 per cent for 2m-plus homes at the top end of the market - which both prompted forecasts that owners would have to cut prices.

And the decision to snub their noses at potential buyers also comes despite the best new mortgage rates shifting upwards and banks cracking down on cut-price interest-only mortgages.

Terraced housing

Housing benefits: Newcastle sellers are offering the biggest price drops

Around 34 per cent of properties currently for sale have been reduced in price since they were put on the market, down from 37 per cent when a previous study was carried out in February.

The typical sum knocked off the original asking price has also shrunk - by more than 500 over the same period - taking average reductions to 19,012 or 7.5 per cent.

But since then major headwinds have hit the property market.

Mortgage lenders including RBS/NatWest, Lloyds/Halifax, Santander, Barclays, Nationwide and the Co-op have imposed much tougher rules on cheaper interest-only mortgages.

Meanwhile, mortgage giant Halifax, and other lenders including RBS, Bank of Ireland and the Co-op have all raised standard variable mortgage rates for existing borrowers.

And the best fixed rate and tracker mortgages have risen in cost. The cheapest five-year fix offered by Chelsea Building Society to those who can raise a 30 per cent deposit has risen from 3.19 per cent to 3.79 per cent.

'The changes to the stamp duty rules significantly increased the cost of buying for many and there were concerns this would quash demand and force sellers to make bigger cuts in their asking prices,' said Nicholas Leeming, business development director for Zoopla.co.uk.

'However, it appears demand has remained strong enough for average discounts to actually fall.'

The biggest percentage discounts are being offered by sellers in Newcastle, according to the survey, with average reductions of 11.1 per cent, or 22,151. Sellers in Liverpool have also made large concessions, knocking 9.2 per cent (14,031) off their original asking prices on average.

 

The smallest asking-price reductions in percentage terms are in Reading, at 5.9 per cent (19,181).

Rotherham was found to have the highest proportion of discounted properties for sale, with 43.9 per cent of sellers having cut their asking prices at least once. The average discount there is 8.6 per cent (12,898). Meanwhile, Blackpool has the lowest proportion of asking-price reductions at just 26.1 per cent, with average discounts at 7.3 per cent (9,736).

Lenders and estate agents reported a rush from first-time buyers to complete deals before the deadline for the stamp duty concession on properties worth under 250,000, which ended in March. They raised concerns that this would cause a bunching up of sales which would be followed by a dip.

And a 7 per cent stamp duty rate on homes worth more than 2million was recently imposed in the Budget, which also caused fears that this would bring further disruption to an already fragile market.

Despite the smaller discounts being offered by sellers, transactions are expected to remain low this year generally as the market remains tough and fragmented.

The figures were calculated from properties listed for sale on Zoopla.co.uk.

 

Here's what other readers have said. Why not add your thoughts, or debate this issue live on our message boards.

The comments below have not been moderated.

Joe, Essex, 12/5/2012 06:58 I simply asked a relevant question in relation to the article regarding the cost and availability of funding and you go off on one. I leave the voting system to the readers to decide, equally I notice from the latest Land Registry report that sales volumes are flat and HPs falling in East London boroughs where you work in, prey explain that one away, are these yet more signs of stability, if nothing sales it must be stable? Hilarious

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- Paul, Planet Earth, 11/5/2012 22:04 - Look I deal with property deals days in and day out. Even the most straight forward of transactions (eg cash buyer, no chains, no survey issues) can become complex and protracted at the conveyancing stage - it really can be a massive juggling act coordinating all the stakeholders, just on one sale, let alone 47! The point I was making (and I don't think I was distorting anything) is firstly how quite unbelievable your 47 property story is, and secondly if there was a grain of truth to it, why be so evasive and defensive about proving details, when you could share some of that valuable specific and relevant experience, instead of responding with the usual generic glib comments. In a word, disappointing. I also notice the vote rigging has returned,surprised that your comment has received all those green arrows within a few hours. Nice to have those sock puppets voting for you, eh Paul?

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Joe, Essex, 11/5/2012 12:34 Oh dear making things up again while exaggerating/distorting the facts while avoiding answering the question being asked how unusual for an estate agent do that. Pls dont make me laugh, of course Ive had set backs delays, hitches etc, but why are you ignoring that loan availability and funding costs impact HPs, pretty obvious to most of us. Again another quiet morning for you in the office, what no customers, no sales, how odd? Hilarious

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- Paul, Planet Earth, 11/5/2012 12:16 - Actually there a number of factors that can impact a new builds' price, just because they are not "unique", doesn't mean they all value the same. Anyway, you didn't deal much with EA's, choosing local area averages, which I do find hard to believe. I'd imagine how you dealt with 47 almost concurrent conveyancing processes, and lord knows how many solicitors - it must have been quite a challenge for you. Or, let me guess, you and the buyers agreed to use only two firms, there were no onward or prior chains, no survey issues, and everything went without a hitch? Hilarious.

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Joe, Essex, 11/5/2012 11:17 Oh dear where to begin, well you missed the most obvious variable that impacts property buying and hence prices and that is the cost and availability of funding. How do you ignore funding when most sales are not cash sales!!! Regarding the use of estate agents I only provided instructions on a very few properties to avoid their steep fees and patchy service levels..Besides valuations on similar properties can be reached by viewing the sales transactions on similar properties in the area particularly when dealing with modern builds of the same construction and similar age and without many unique features that would impact the price. I guess no many sales today hence the numerous posts during office hours? Hilarious

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- Paul, Planet Earth, 11/5/2012 10:46 - Paul, the seasons change, house prices remain stubbornly stable, we all get older - but still the same old, tired questions from you. A fair market price is at a level where buyer and seller are prepared to engage in a transaction. The market is defined by firstly supply, and secondly demand. All basic elementary economics. Which reminds me, did we ever get an answer from you about how you reacted to the valuations you received, and how you interacted with the various EA's when selling those 47 properties?

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Joe, Essex , 11/5/2012 09:24 You seem to be claiming valuing properties at fair market price but given that asking prices have been rising, what is a fair market price? Equally why are you not so confident in confiding with us if your sales volumes are so good from fair pricing you refuse to disclose these. Lastly if you are so busy why the constant posts during office hours? Hilarious

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Exceptionally low interest rates are at present stopping the housing market from collapse. As soon as interest rates start going up we will see a big rise in price reductions as people will not be able to afford mortgage payments after years of no wage rises.

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Buyer is king! ROCK ON '!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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- John, Southampton (formerly Exeter), 11/5/2012 9:08 - "Joe, Essex some of your clients trying to sell their houses t unrealistic ally high prices old alo be described as chances" - Not sure how you can be so confident of this, or was this a generalisation. Yes, I think it was. The fact is we are employed by the vendor, and we, like all agents, will tell the vendor if their price is unattainable as we want to sell their property. Simple fact is nobody wins if a property is valued above ceiling price. In summary, I think you are confusing your own personal perception of over value, with that of the general market. I suspect there is a massive gulf between the two.

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