In the face of a fragile economic backdrop and rising mortgage rates, buyer behaviour is shifting. With more homes on the market and less competition than last year, potential buyers are spending more time contemplating before putting an offer on the table. This has meant homes taking longer to sell last month than in any June since 2013, excluding the years dominated by Covid.
That said, this hesitance is not necessarily leading to significant discounts. Despite a 19% increase in available homes on the market in June 2023 compared to June 2019, the bulk of this surge is due to the extended selling period of each home. Given that 11% fewer homes came onto the market compared to the same period in 2019, and that demand from new applicants dipped by just 4%, the supply-demand imbalance is holding firm which is supporting prices.
Additionally, few vendors need to sell urgently. The majority are willing to hold off in hopes of securing a better price and a more favourable mortgage rate in the future. As a result, the number of transactions taking place has borne the brunt of this slowdown, as potential sellers wait in the wings.
Buyers are taking longer to offer
Buyers took an average of 15 days between registering and making their initial offer on a home in June, the longest duration in any June since 2014. This is a rise from 13 days in June 2022 and a significant increase from 8 days in June 2020, during the post-lockdown housing market surge. First-time buyers, however, still tend to be a bit more eager, making an offer an average of 12 days after registering.
Consequently, a home took an average of 52 days to receive its first offer after being listed in June, regardless of whether the offer was accepted or not. This is a 19-day jump from June 2022 and is the second-longest duration between listing and first offer since 2014, the longest being during the Covid crisis.
Every region experienced an uptick in this period, with Wales recording the highest year-on-year increase, while Scotland deviated slightly with only a 1-day increase. Homes in the East of England took the longest to receive an offer, averaging 64 days, closely followed by London at 63 days.
Slower to sell
Buyer caution means that on average it took 48 days for sold homes to go under offer in Great Britain in June, 19 days longer than in June 2022. Discounting the Covid period, this is the slowest June since 2013. However, the time taken to sell has shortened over the course of this year, as it typically does. Back in January, partly due to the usual seasonal slowdown but also the effect of the mini-Budget, it took an average of 78 days for a seller to accept an offer.
Interestingly, more than a quarter (28%) of all homes that came onto the market in June went under offer within 2 weeks. This is the same pace as last year and up from a pre-Covid 5-year average of 23%. This reflects a bit of a two-tier market at the moment. While competitively priced homes in sought-after locations continue to sell quickly, there is a long tail of others which are taking much longer to find a buyer.
Mid-market properties, priced between £500k and £1m, experienced the most pronounced slowdown, taking 28 days longer to sell than the previous year. 17% of +£1m homes that came onto the market in June sold within a week, down from 23% in June last year, but higher than the 11% 5-year average recorded pre-Covid.
Sellers remain reluctant to offer deeper discounts
Despite escalating mortgage rates, there haven't been clear indications of buyers securing significant discounts on properties. In June, 52% of homes sold in England & Wales were sold below their final asking price, identical to the percentage in May. These homes were sold for an average of 4.4% below their asking price, a figure that has barely altered. Overall, the average seller in England & Wales achieved 98.8% of their asking price last month.
Despite higher rates, mortgaged buyers were less likely to pay below the asking price in June than in May. The percentage of buyers with mortgages having an offer accepted below the asking price dipped to 51% in June from 52% in May. Consequently, a higher proportion of buyers with mortgages paid over the asking price as buyers grapple to meet sellers’ expectations.
Nearly a quarter (24%) of homes in England & Wales still sold above their final asking price in June. This is higher than pre-Covid times when 17% of homes sold above their asking price in June 2019. On average, these homes sold 17 days quicker than homes that were a sold for a discount.
That said, 49.4% of all homes sold in June had already foregone a price reduction in excess of £1. While this figure has stabilised in recent months given that a growing number of homes coming onto the market have been priced to reflect today’s economic realities, price reductions are more common than this time last year when just 35.3% were reduced and 46.2% in June 2019.
