There are signs that the housing market is stabilising which is good news for sellers as we approach the peak spring sales season. These market metrics which cover January and February showed increasing parallels with 2019, albeit with a much slower rate of house price growth.
It is the prime cash-rich end of the market which has been holding up best although sales here are taking a little longer than usual as sellers hold out for last years prices.
ASKING TO ACHEIVED PRICES
Last month, the average seller in England & Wales sold their home for 98.9% of their asking price, the same as February 2019. This marked the fourth consecutive monthly pick up following October’s dip when mortgage rates rocketed post-mini Budget.
However, average asking to achieved figures – the initial price at which a property is marketed and then sold for - remain well below the February record of 101.0% recorded this time last year.
But current figures suggest that more realistic pricing is creeping in. In February 24% of homes sold achieved their asking price, the same share as February 2022, and up from a low of 21% in December 2022.
It’s the top end, rather than the lower end of the market that is driving these figures. In February, the average seller who sold a +£500k home achieved 97.9% of their asking price, up from 97.6% in January. Whereas homes sold for less than £500k achieved 99.1%, the same as the previous month. Affordability issues are clearly playing a role as higher rates bite.
Suburbs and market towns are where most buyers are prepared to pay close to the asking price. Sellers achieved 99.1% of their asking price on average in February, compared to 98.6% in cities.
PRICE REDUCTIONS
Meanwhile the share of homes sold following a price reduction has risen from 31% in February 2022 to 49% in February 2023. This is close to the pre-Covid rate of 47% recorded in February 2019. Across the country, five regions saw fewer price reductions last month. Wales recorded the biggest fall, where 37% of homes were sold following a price reduction in February, down from 47% in January 2023. Meanwhile the three Southern regions outside of London all saw a rise in price reductions.
TIME TO SELL
February’s figures also show that it’s taking longer to sell a home. On average it took 64 days last month to sell a property (the time from coming onto the market and finding a buyer) making it the slowest February to sell a house 10 years.
However, much of this is still a hangover from the market slowdown which began late last year. 55% of homes sold in February were bought onto the market before the new year.
In contrast this time last year, when time to sell fell to a record low in February, just 40% of properties sold in February had come onto the market before the new year.
Typically, the number of days it takes to sell is seasonal and there tends to be a big decrease between January and February following the Christmas lull. On average, time to sell falls by around 40% between January and February. But this year, time to sell over the first two months of 2023 only fell by 17% (or 13 days).
Generally, larger homes take longer to sell. This is partly a reflection of the smaller pool of buyers with larger budgets, but also top-end sellers’ willingness to wait the market out.
However, at an average of 64 days, it’s two days quicker to sell a one-bed home than it was in February 2022.
These ‘post mini-Budget’ effects are likely continue to drop out of the picture in the coming months. This meaning that we expect average time to sell numbers to continue falling in the months to come, suggesting that stock numbers which are well up on last year, may well be close to peaking.
