Wealthy homeowners forced to slash selling prices

Nearly two-thirds of selling prices for £1 million-plus houses see reductions, according to new research

Letting and estate agents signs outside flats on the Old Kent Road in London. PA

More than six in ten UK homeowners looking to sell houses worth more than £1 million have been forced to slash their prices, according to new figures from Hamptons estate agents.

Sixty-one per cent of those asking more than £1 million for their houses had to reduce the asking price in January, the highest figure in two years, compared to 54 per cent in December last year, in a sign that the housing market is slowing at the top end.

The percentage of wealthy house sellers having to slash prices has been growing since last June, when the figure was 39 per cent.

The share of sellers having to cut prices in the market at a whole was 45 per cent.

Higher mortgage rates and soaring inflation over the past several months has meant that buyers have had to adjust their budgets downwards and sellers are having to be more realistic about asking prices.

Nonetheless, Hamptons pointed out that the market will adapt.

“Fifty-six per cent of these £1 million-plus homes sold in January came on to the market pre-October. Therefore, we expect the number of price reductions to drop off in coming months, given that a rising share of house sales will have come on to the market more recently and are therefore more likely to be priced for today’s economic realities, reducing the need for price reductions,” the estate agent said.

Hampton's research shows that the average length of time it takes to sell a £1 million-plus house has fallen slightly.

In January, the average number of days between an instruction to sell and accepting an offer was 92 days, down by only one day since the same month in 2022, and 39 days lower than the 131 days it took to sell a £1 million-plus house in January 2018.

A pedestrian looks at properties in the window of an estate agent shop in the Mossley Hill area of Liverpool, UK, on Thursday, Dec 1, 2022. Photographer: Mary Turner / Bloomberg

Flat asking prices pointing to soft landing?

Meanwhile, figures from the property website, Rightmove, showed that overall UK asking prices for the market as a whole are flat.

Average asking prices for UK residential property rose by just £14 ($17) in February from January, the smallest rise on record for a month which normally sees a big seasonal increase, the data Rightmove showed on Monday.

Asking prices usually start to grow in February, ahead of the Spring selling season.

“This month's flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint,” said Tim Bannister, Rightmove's director of property science.

“The frantic market of recent years was unsustainable in the long term, and our key indicators now point to a market which is transitioning towards a more normal level of activity, after the market turbulence at the end of last year,” he added.

Rightmove said that the asking prices remaining flat on the month, rather than falling, could point to a softer landing for the UK housing market than many analysts have previously.

Economists polled by Reuters in November forecast prices would fall by 5 per cent this year, while analysts at the Japanese bank Nomura predicted last month that there would be a 15 per cent decline by mid-2024.