In an unprecedented shift, the UK real estate market is presenting an opportune landscape for buyers with properties transacting at up to £25,000 below the asking price. This situation, emerging from a complex interplay of factors, is shaping what is perhaps the most favourable buyers' market in recent memory.
Declining Property Prices: A Buyer's Market
The average house prices in the UK saw a 1.2% year-on-year decline in October, as reported by property portal Zoopla. This regression is attributed to the market's adjustment to higher mortgage rates, which has led to a dip in transactions and sales numbers. Experts from real estate agencies anticipate a further softening of prices into 2024.
Currently, sellers are conceding to an average of 5.5% off the asking price to secure a sale. This discount on asking prices equates to a cash term of £18,000 on average. Despite a decrease in buyers, sales are holding strong with figures 15% higher than the previous year and 5% higher than pre-pandemic levels in 2019.
Geographical Disparities in Property Values
Property values across England and Wales are on a downward trend. The biggest falls have been noted in the Eastern region with a 2.6% drop, followed by the South East and London with declines of 2.4% and 2.0%, respectively. However, Scotland's property market paints a different picture with prices 1% higher.
Buyers' Expectations and Tactics
Buyers entering the market now hold the expectation of securing a significant discount. By asking the right questions, adapting their buying approach to match the seller's profile, and understanding the market conditions, savvy buyers are managing to make profitable purchases.
One such tactic, known as 'gazundering,' involves the buyer lowering their offer at the last moment before contracts are exchanged, compelling the seller to either accept the reduced offer or risk losing the sale. While this strategy can potentially save the buyer some money, it can also strain the buyer-seller relationship.
The Rental Market: A Shift Among the Wealthy
In contrast to the general trends, ultra-high-net-worth individuals in London are opting to rent rather than buy luxury homes. The average rent in prime central London has spiked by 8.8% year on year, with rental values nearly 30% above their pre-pandemic figures. This trend is particularly noticeable among wealthy individuals from the U.S., China, and the Middle East.
As the UK real estate market continues to evolve, potential buyers are being presented with an unparalleled opportunity. However, as with any investment, understanding the market's nuances and employing the right tactics are key to reaping the benefits.