Housing market’s weak pulse shows autumn improvement
The number of homes showing as “sale agreed” across England jumped by nearly 8% to 62,695 during the middle two weeks of September, reflecting the post-summer holiday seasonal activity increase we’d normally expect.
However, transaction numbers remain substantially (-30%) lower than last year, and still 20% below 2019 levels according to other property sites.
‘Sold’ Asking Prices Fall 3.5%
During the same 2 week period, the “typical” published asking price of ‘sold stc’ homes fell -3.5% to £279,995, the lowest recorded figure this year. These figures exclude all “For Sale” or unsold homes, and give a better picture of what’s happening at the transaction coal-face.
At the start of September, this figure was £290,000, having gone back up from August’s £280k, which may be as a result of serious sellers taking their homes off the market for the quiet summer holidays, then relaunching them at keener, lower prices at the start of the autumn school term.
“Unsold” prices fall only -1.5% and remain for sale.
The typical (median) asking price of all the homes NOT selling also dropped, by a much smaller amount of 1.5% or less than half the amount of selling properties. This shows clearly that most people are not dropping their asking prices enough to get acceptable offers.
The most common mistake made by sellers who have initially set their asking price too high, is to lower their asking price too slowly and not far enough, leading to the “chasing the market down” nightmare scenario. It’s critical to cut deep, get beneath the falling market price for your home, and catch it.
The figures above show that there are 6 homes “For Sale” for every 1 home showing as “Sold stc”. This is most definitely a ‘buyers market’.
The Mexican Standoff Gap
The difference in median asking price of For Sale v Sold prices has widened again, from £50,000 at the beginning of September, to £55,000 now, as the ‘sold’ asking prices fall faster than the ‘for sale’ ones do. This indicates accelerating price falls at the front line.
There’s no such thing as an average home or house price
It’s important to remember that the figures above represent the mathematical average and median numbers for the whole of England. Almost everyone trying to buy or sell their home will be experiencing numbers better or worse than this. It depends on the local market and budget level.
The Great Downsizing
It’s almost certainly true that the buyers most in need of price falls, first time buyers, are seeing frustrating levels of competition for lower priced homes. So, while average price falls nationally are now approaching 2008 levels, the largest of these falls is at higher values, not at the entry-level.
This is made worse by the great downsizing of people looking to leave expensive-to-heat homes with too many rooms and cut their outgoings. Often cash buyers, they are a better bet for sellers of low value homes who are nervous of waiting for mortgage lenders to approve valuations.
Where prices go from here
There is immense and accelerating downward pressure on house prices, which is not yet being reported, because of the time lag.
More and more people are coming off their low fixed rate mortgage (500,000 more by the end of 2023) and BTL landlords with unaffordable mortgage payments also scramble for the exits, at the same time as buyers retreat in the face of mounting mortgage costs, lower affordability and a worsening outlook for the economy.
All this, combined with the reporting time lag, leads to the certainty of what I call ‘mathematical gravity’ bringing house prices down, hard. There’s no such thing as a soft landing when markets correct. 2024 will be bleak.