Fewer than 100,000 homes were sold in May, the lowest figure since Autumn 2016. But is the market slowing due to unrealistic asking prices, or are other factors making buyers hesitate?
Here, we take a look at the main reasons why houses aren’t selling, and explain how you can set a realistic price for your home when putting it on the market.
Are sellers asking too much for their homes?
Data from HMRC shows around 96,910 house sales were registered in June, a drop of 3.3% since May.
Several factors could be holding buyers back from making an offer, including ongoing uncertainty over Brexit negotiations and stagnant wage growth.
But other data indicates the issue may lie with the asking prices set by vendors and estate agents. According to data from the National Association of Estate Agents, 79% of properties sold for below their asking price in June, while just 2% sold at a higher price.
Estate agents had an average of 37 properties listed per branch, but the number of sales agreed was just 11 – and this despite a 10% increase in the number of buyers registering at branches.
These trends suggest that homes are being priced well above what buyers are willing to pay.
Sellers haven’t adapted to a changing market
For vendors in high-growth regions of the UK, recent years have brought steady – and in some areas double digit – price growth. While the market has begun to slow in some areas, it may be that not all sellers have adjusted their expectations.
Meanwhile, although most estate agents offer expert knowledge of their area, they also need to compete for instructions – and for many sellers, the agent offering the best promises gets the deal. When those promises can’t be met, homes remain unsold and asking prices get cut.
Are buyers facing more obstacles than before?
It’s not just sellers that have been forced to adjust to more challenging conditions in the UK’s housing market. At every level, buyers are now facing hurdles that are making it harder for them to progress up the property ladder.
Aside from the difficulty of raising a deposit, buyers with only 5% to put towards their first home are now seeing mortgages get more expensive. As an example, on a two-year fixed rate mortgage, rates have increased from 3.89% at the start of the year to 4.24% in July, according to Moneyfacts.
Coupled with the closure of the Help to Buy mortgage guarantee scheme, the expense of buying new-build homes using a Help to Buy equity loan, and the unaffordability of shared ownership, the road for first-time buyers has become significantly harder.
Second steppers and families
It’s also not as easy as it once was to progress up the property ladder – research from Lloyds Bank shows a funding gap of £126,000 between first-time buyer and second stepper homes.
While second steppers benefit from around £100,000 in equity growth, this still leaves a gap of over £20,000 – and the same study found that a third of second steppers rely on help from the Bank of Mum and Dad to make the jump.
How to set an asking price
What do these factors mean for you as a seller? Setting a realistic asking price is more important than ever when putting your home on the market.
Supply and demand can change quickly, so there’s no guarantee you’ll get it right first time. But these simple tips should help you on your way:
- Do some research into asking prices and sale prices in your area by using property portals and land registry data
- Look at recent sales on your street or in your local area, including asking price, sales price and time on market (meaning how long the property took to sell) – but make sure you find homes with similar layouts and positions as your own
- Get three valuations from estate agents to give you an indication but don’t automatically go for the one offering the highest – compare these valuations to your own research
- Think about how quickly you’re looking to move – if you’re not in a rush you might be able to ‘test the waters’ with a higher asking price (but beware the pitfalls of property chains)
- Consider having a house survey done before you list your property – this can allow you to fix any problems in advance that may scupper a sale
- Check out our interactive map to find out how prices have changed in your area