Asking Prices Drop by £18,000 on Average; UK Becomes Buyers Market
According to Zoopla’s latest research, homebuyers in the UK are in the strongest position in five years, with the property portal detecting an average of £18,000 reduction in asking prices.
For those seeking profitable a property investment strategy, this could be an opportune time to add UK properties to their portfolio, especially with mortgage rates dropping to around 5%.
Let’s look at this Zoopla report in greater detail.
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Zoopla Research at a Glance
- Property prices have fallen across England and Wales in every price band
- The most significant drop is in southern England, despite prices being well above pre-pandemic levels
- House price falls should end in 2024
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What Did Zoopla Say About Asking Prices in the UK Property Market?
Zoopla research shows discounts in asking prices have risen to £18,000 – the most significant change since 2018. These figures suggest that investors could be in for a firm and secure “buyer’s market” despite lower supply levels across the UK.
Zoopla shows discounted asking prices on completed sales increased by 5.5% during the first weeks of November, representing a 3.4% increase from the first half of 2023.
London property market areas and the South-East saw a considerable discount of 6.1% (roughly £25,000). However, property prices are much higher in the capital and south-east region, so discounted properties in those areas will still cost significantly more than better-value locations such as the North West, where property prices are remarkably resilient amid some of the best rental yields in the country, particularly in Liverpool and Manchester City Centre.
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Why Is the UK Property Market a Buyer’s Market?
As well as asking prices dropping to the lowest level in five years, various factors have made the UK property market an enticing prospect for buy-to-let investors.
When Kwasi Kwarteng announced his mini-budget in 2022 – which would cut short Liz Truss’ tenure as prime minister – mortgage rates soared over 6%.
However, inflation has been halved in 2023, thanks to the Bank of England raising interest rates 14 times in a row; they currently stand at 5.25%.
There is renewed confidence among mortgage lenders, who envision an upturn in property investment prices over the next year. Many have dropped rates below 5% – anticipating more buyers to return to the market and make the most of reduced property prices.
In addition, buyer demand is significantly lower than in 2019, meaning buy-to-let investors will face less competition if they enter the property market now, despite attractive property prices and rents rising to record-breaking levels.
Research from the Office for National Statistics shows the price of UK properties dropped by 0.1% on average from September 2022 to September 2023 – the first yearly price drop in over a decade. According to those statistics, the average cost of a property is now £291,000.
But with prices expected to bottom out in 2024 and rise again in 2025, data suggests that buyers could do well to get involved with the market now and enjoy capital appreciation relatively quickly.
Executive director of Zooppla, Richard Donnell, said the following about the latest Zoopla research:
‘These are the best conditions for homebuyers for some years with more homes to choose from and with sellers more prepared to negotiate on price to agree a sale.’
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