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Sellers less prepared to accept lower offers

A large new wave of homebuyers entered the home buying market in September and October.  According to Propertyfinder.com's October survey 56% of home buyers had been searching for a month or less – up 8% from 48% in July.

As a result, sellers are in an increasingly strong position.  Supply of property remains low, especially at the higher end of the market, while demand for homes is rising not just from owner occupiers, but also as property investors buy homes to meet demand from tenants – among them many of the 600,000 migrants who have come to the UK from the new EU countries. 

The tight market means sellers are now less prepared to take low offers.  In October sellers were accepting offers on average 3.5% below the asking price, compared to 5.5% 12 months ago, said the report from Propertyfinder.com.

Warren Bright, chief executive of propertyfinder.com said: “The price a seller actually achieves is far more important than asking prices when trying to assess the temperature of the housing market.” 

“Without even taking price increases into account, sellers are now squeezing an extra £4,000 out of the average home sale than they could a year ago simply by demanding offers closer to the asking price.  This extra cash is more than enough to cover all their legal and moving costs – although it won't make much of a dent in the stamp duty bill for those trading up the housing ladder.”

The research also revealed that both buyers and sellers are still confident that house prices will continue to rise with 80% of buyers and sellers expecting house prices to continue to rise over the coming year, on average by 6.3%. 

This is despite the majority of them (more than 70% of respondents) believing interest rates are set to increase again, as soon as November.

Warren Bright said: “The acceleration in the number of new buyers coming to the market will sustain demand for housing right up to Christmas.”

“This is a combination of a seasonal effect and the favourable mortgage market.  While base rates are on the up, fixed rates on mortgages have actually been falling since the middle of September.  Around 80% of borrowers typically opt for a fixed rate.  Cheaper mortgages mean more home buyers and keep confidence in the market high.”