Slowing Property Price Growth leads to Significant Reductions
The growth in property prices has slowed to its lowest rate for more than four years which has lead to price reductions of more than 5 percent, prompting a warning to sellers about the risks of overpricing their properties. The latest asking price index found that the rate of property growth for the last year was 2.3 percent, the lowest it has been since 2013. And, for the month of February, growth is at its lowest level since 2009.
Given the slow rate of property price growth, property experts are urging sellers in some areas to avoid overpricing their homes. While there is still plenty of growth in the London commuter belt, the slowdown in other areas means we are approaching a territory where many buyers are unable, or unwilling, to pay the asking prices of sellers.
One-in-five properties are overvalued
The reduction in the rate of property price growth was expected by many given the surge prices have had since April 2013, when the rate last fell below the current level. In that time, upwards pressure has led to an average 23 percent rise in property prices, pushing values up by nearly £60,000 in that time.
This dramatic and prolonged rise in prices, combined with the negative pressure of an increase in the cost of living, tighter lending criteria and Brexit uncertainty, means many homebuyers simply cannot afford to pay property asking prices.
As a result of the convergence of these factors, research by Which? found that one-in-five properties in England and Wales are overvalued and have had more than 5 percent cut from the original asking price. This situation is particularly delicate in London, where 28 percent of properties have been discounted.
Fewer transactions expected this year
There's also evidence that the housing market is slowing, with up to 11 percent fewer transactions expected this year as a result of the tax changes and economic uncertainty. The Council of Mortgage Lenders (CML) said it expects the number of transactions to fall to 1.17million, the lowest level since 2013.
In 2016, the CML forecasted 1.25million transactions for the year, with £237bn worth of mortgage advances. The actual number of sales for the year came in slightly lower than anticipated, at 1.23million, but with more lending, at £246bn.
Is now the time to buy?
Given the slowdown in price growth and the number of properties that are currently discounted, now looks like a great time to buy. As is the case in the property market, any declines in price growth are fleeting, so prospective buyers should be quick to capitalise before normal service resumes. With prices set to rise again next year, this looks like a rare opportunity to save thousands of pounds.
The research from Which? shows that one-in-five property prices have been reduced by more than 5 percent. Given the average UK house price of £219,544 (as of December 2016), prospective buyers could stand to make a saving in excess of £10,000.
If you think now could be the right time to make your move in the property market, please get in touch with the team at Martin & Co. Camberley today. We can help you find the right property, at the right price, whatever you're looking for.
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