UK housing market starts to slow as more sellers cut prices

The UK’s red hot housing market is beginning to cool, with a growing number of sellers cutting asking prices and the average time to sell a home lengthening, according to data published by the property portal Zoopla.

More than one in 20 homes for sale had their asking prices slashed last month, by an average of 9 per cent, Zoopla said, the highest level of discounting in 18 months.

“We’re seeing the start of signals that things are softening,” said Gráinne Gilmore, the portal’s head of research.

Nationally, the company forecasts average prices will rise 3 per cent this year, but in parts of the country “it feels we’re nudging a natural ceiling [for house prices]”, she said.

House prices in the UK have increased by an average of 18 per cent since May 2020, when the housing market was reopened following a period of coronavirus lockdown, according to official figures. In March, the average price of a property in the UK hit a record £278,000.

In Wales, where prices have risen fastest, the average price increased by 22 per cent between May 2020 and March this year.

Now it is in Wales and the south-west of England, another area in high demand during the pandemic, that discounting is setting in quickest, according to Gilmore. “That doesn’t feel like a coincidence,” she said.

After two years of rapid price rises, buyers are more stretched and now face a cost of living crisis, which is hitting disposable income, and rising borrowing costs, with the Bank of England having raised base rates four times in six months and expected to go further.

Sellers are aiming to move fast, with the increasingly gloomy economic outlook stoking expectations of a slowdown or potentially even a dip in house prices.

Despite sellers cutting prices, Zoopla’s figures for the last month show an increase in the average time taken to secure a sale. Three-bedroom homes outside of London, which have been particularly in demand, remain the fastest selling properties, taking an average of 18 days to sell, according to Zoopla, up from 16 days in March.

Flats outside London and houses in the capital are also taking longer to sell. Zoopla said that one reason was the seasonal nature of the market — spring tends to be a busy period. “But the data also signals that the demand pressure in the market is easing as the economic headwinds — rising inflation and cost of living — start to have an effect among buyers,” it added.

Flats in London bucked the trend. They have been the worst performing properties during the pandemic, as buyers hunted for more space and were perturbed by the ballooning building safety crisis, which has disproportionately affected flats.

The average time for a sale of a two-bedroom apartment in the city decreased between March and April, from 32 days to 29, said Zoopla.

“The exodus of people leaving cities has slowed and perhaps even gone into reverse,” said Dominic Agace, chief executive of London-focused estate agent Winkworth.

Two-fifths of the people going to Winkworth’s Notting Hill office to hunt for rental properties were London returnees, he said.

“People who rushed away for space are now happier being close to work,” he added.