House prices fall but demand improves

Sellers continue to make modest downward adjustments to their asking prices and are accepting asking price discounts averaging 4% (£14,000) as buyers have more options. Sellers have seen sizable price gains over the last three years giving them more room to be flexible on agreed prices.

Properties are also taking longer to sell with the average time from a home being first listed, to going under offer and sold ‘subject to contract’, jumping by 71% (15 days) compared to 12 months ago.

Scottish properties currently have the shortest sales periods at 28 days (as homes are marketed with a survey and valuation) compared with London, which has the longest time to sell at 44 days.

Buyers are seeking better value. Year on year, there has been an increase of 5% in the share of sales in the bottom 40% of the market (by price) and conversely, a drop of 4% in the share of sales in the top 40% of the market. This indicates continued demand from first-time buyers or second-steppers.

Prices may be falling, however, demand continues to improve with the most affordable areas led by Scotland, Wales, the North East of England and London continuing to see above-average demand.

Several factors supporting the desire to move and these include working from home 1-2 days a week is becoming the norm for many office- based workers. This means people can look further afield for a home than has been the case in the past, enabling a search for better value for money.

The spike in retirement caused by the pandemic is also a trigger for home moves. At the same time, cost-of -living pressures look set to continue to encourage some to down-trade from larger homes that are expensive to run.

Areas with the least demand in the UK are in regions where prices jumped the most over the pandemic and where prices are higher than the national average.

Commenting on the latest report Richard Donnell, Executive Director at Zoopla says: “The housing market is arguably more balanced than it has been for more than three years. Levels of supply have recovered and buyers and sellers are not miles apart on where they see pricing and this means deals are being agreed at an increasing rate. Prices are drifting lower compared to a year ago but fears of a major downturn in prices are overdone.

"Falling mortgage rates and a strong labour market are supporting activity levels from committed movers who need to be realistic on price if they are serious about moving home in 2023. We expect to see levels of activity continue to steadily improve over Easter and into the summer and H2.”