Amount of Sellers Reducing the Price of their Home Increases
The leaves are falling around the U.K. and so are property prices according to new research from zoopla a property website. Around 30% of homes have seen sellers reduce their asking prices, with an average reduction of £26,000. Do the slowing property prices really indicate a declining housing market?
The U.K. market has seemingly been able to stand it's ground in the face of Brexit uncertainty. The housing shortage and increasing population have allowed prices to continue to rise in 2018 – although by a minimal 0.9% in September from the previous year. The bigger picture shows that the rate of price increase is a dramatic reduction from the 4.5% increase recorded in September last year.
In London, almost 40% of properties have reduced in price and in areas such as Chelsea and Kensington, the prices have been slashed by more than £127,000. Although these years are home to the most outlandish properties, the trends are the same throughout the U.K. In areas like Bradford, Woking and Mitcham, more than 45% of homes have reduced their asking prices, saving a buyer £26,131 on average. Property prices have not dropped this rapidly since September 2009 after the financial market.
Property Sales are also Down
Despite reduced prices, the number of transactions have also dropped by 16% on a monthly basis with 72,500 sales made in September. Property analyst predicate there will be a total of 1.2 million house sales for 2018, behind the last 4 years which have all had more than 1.2 million total transactions.
The slashed prices are a good news for first-time buyers looking to get on the property ladder, but new research shows that younger people aren't as interested in seizing the slowing market. With property prices out of reach for many young people and a general shift away from wanting to own a home, young buyers aren't rushing to the market as expected.
The UK housing market might be cooling – at least in some regions – but we should not be eager to think this signals an easing for the cost of living or ability to purchase property. Even with the lower price tags today, the current house price index shows an average price of a UK property of around £232,000 and £484,000 to live in London. Home ownership for individuals in their twenties has fallen by more than 10% in the last ten years. As more young people turn to long-term renting, the property market is starting to see a new demand for rental units, and the decrease in demand may continue to affect transaction rates and property prices.