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August 27, 2014 11:29 am
Most homes changing hands in the British property market are now selling at a discount, according to new figures, as tighter mortgage rules and the prospect of rising interest rates cool potential buyers’ ardour.
Two-thirds of homeowners discounted their asking prices in order to sell their homes in July, according to figures from the National Association of Estate Agents. The number of homes for sale in estate agents’ branches is still growing, yet in recent months buyer registrations with estate agents have begun to decline, the data show.
As a result, 66 per cent of homes were sold for less than the asking price in July – up considerably from May, when fewer than half of sellers accepted a discount. Only 4 per cent of homes sold at a premium to their asking price, down from nearly one in five in May.
Estate agent Foxtons saw its share price slide by more than 5 per cent on Wednesday after forecasting a market slowdown for the second half of 2014.
Mark Hayward, the NAEA’s managing director, said that a dearth of housing supply had been “a significant issue” over the past few months. The lack of supply has helped to drive rapid rises in prices over the past year as the housing market recovery which began in London started to roll out across the rest of the UK.
Average house prices grew by more than 10 per cent across the UK in the year to June, according to the Office for National Statistics.
The increase in the number of sellers slashing their asking price was a “positive” for the market, Mr Hayward said: “This not only signals an appetite for movement in the market, but it is also positive news for current housebuyers.”
The trend is expected to have an impact on future rates of house-price growth in Britain’s priciest market, London. Estate agency Savills downgraded its forecasts earlier this week, taking into account the prospect of interest rate rises beginning to hit the market at some point within the next couple of years.
London buyers will face affordability problems and as a result the London housing market will see growth of 5 per cent in 2015 and no growth in 2016, according to Savills, down from 6 per cent and 4 per cent in last year’s forecasts.
London prices grew at nearly 20 per cent in the year to June, ONS data shows.
Lucian Cook, residential research director at Savills, said: “The heat is coming out of the market in response to prospective interest rate rises and limits on mortgage borrowing. We expect much lower price growth over the next four years, particularly in London and the south of the country.”
Buyers’ “greater sobriety” was also likely to limit the growth in transaction numbers, Mr Cook added. Official data recently showed a slackening-off in transaction volumes growth.
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