UK Home Sellers Offering Average 10% Discount as Buyers Haggle in Slow Market

Sellers in the UK are increasingly accepting discounts of nearly 10% on asking prices, a sharp contrast to the market dynamics of 2021 and 2022, according to data from estate agent Knight Frank. The average home sold between July and September achieved 90.6% of its initial asking price, indicating a significant shift as buyers leverage increased negotiation power.

This trend is driven by a combination of higher mortgage rates and a larger inventory of homes on the market, forcing sellers to make substantial price reductions to attract buyers. For instance, a property initially listed at £300,000 is now selling for approximately £271,800, while a £500,000 home might sell for around £453,000. Some buying agents report securing discounts as steep as 26% on smaller flats, new builds, and former buy-to-let properties where sellers are particularly eager to complete transactions.

The market has changed considerably from the pandemic era, when a stamp duty holiday, a 'race for space,' and cheaper mortgages fueled high demand. In the same three-month period in 2022, sellers were achieving 100% of their initial asking prices on average.

Premium Market Struggles

The upper echelons of the property market are experiencing the most significant challenges. Data from TwentyCi reveals that properties priced at £2 million and above are half as likely to sell as those below £2 million. These higher-value homes take twice as long to find a buyer and see average discounts approaching £250,000.

In London, particularly in postcodes with properties valued over £1 million, the situation is even more pronounced. Fewer than 40% of homes listed between July and September found buyers. For every sale agreed in these areas, 3.6 homes were listed, and only 28% of all listed homes found a buyer during that quarter. Furthermore, 62 out of every 100 sales were withdrawn from the market, a rate double the national average, suggesting many sellers are giving up on selling at current price points.

Jonathan Hopper of Garrington Property Finders notes that sellers at the premium end face a difficult choice: either withdraw their property from the market or accept substantial price cuts. He also observes a 'discount two-step' strategy emerging in southern England, where sellers first reduce prices to generate interest and then agree to further reductions during negotiations.

Over-Valuation and Negotiation Tactics

Properties are sometimes over-valued due to sellers' desire to achieve the highest possible price, or in some cases, due to estate agents overpricing to secure an instruction, with the hope of negotiating down later. Jo Eccles, founder of Eccord, emphasizes that asking prices do not always reflect true market value, as sellers may try to recoup their initial purchase price, stamp duty, and renovation costs.

Buyers seeking to negotiate effectively are advised to research local market conditions rather than focusing on national trends. Understanding buyer demand and property prices in a specific area is crucial. While sellers' asking prices are a starting point for negotiation, buyers should conduct thorough homework to gauge the realism of the price and the seller's motivation.

Key indicators for buyers include signs of a seller being in a hurry or struggling to secure serious offers. If a property has been on the market for a while with no offers, or if previous offers were rejected, the seller may be more open to negotiation. Buyers are also encouraged to present their offers with as much detail as possible, including their financial position, solicitor, mortgage lender, and desired timelines.

Eccles advises against debating property worth with estate agents or using comparable sales data to argue for a lower price. Instead, buyers should present their offer with tact, highlighting their commitment and suitability as a buyer. This approach fosters goodwill and reduces the perception of the buyer as aggressive or difficult, which can be particularly important with sellers who may be facing financial losses.