Higher interest rates are weighing on the market but several metrics point to the second half of this year being stronger than the first. However, this recovery is dependent on how quickly inflation is brought under control and whether the Bank of England can start reducing rates.
TIME TO SELL
In March, the average home sold in Great Britain came onto the market 48 days earlier, which means it took 22 days longer to sell a home than the same month last year – although, at that point, time to sell was at a record low.
Across Great Britain, 11% of March’s new instructions had an offer accepted within a week, slightly down from 12% in March 2022. However, well-priced and future-proofed homes continue to sell at a similar pace to or slightly quicker than last year, particularly at the top end, where buyers are often cash-rich and likely to stay in that home for longer.
Of all properties priced at £1m or more that came onto the market last month, one in ten sold within a week. This is up from 8% in March 2022 and is the second highest proportion of any March since Hamptons’ records began in 2009.
Rising mortgage rates have led to more homes being sold after being reduced – this peaked in February, when half of homes that changed hands in Great Britain had undergone a price cut of at least £1.
As the year has progressed, a rising share of homes being sold came onto the market this year rather than in 2022 – 40% of homes sold last month were put on the market last year, down from 55% in February. As a result, the proportion of homes sold following a price reduction decreased slightly in March to 48%. We expect this figure to continue falling in the coming months as the market stabilises and new instructions are priced realistically.
ASKING PRICE V. SOLD PRICE
In March 2022, the average seller in England and Wales was achieving a near record of 101.0% of their asking price. This fell to 98.8% last month; however, the continued lack of homes coming onto the market means sellers are still achieving closer to their asking price than in any March before 2021.
Homes that sell quickly are more likely to achieve their asking price – and those that came onto the market in March 2023 and sold in the same month achieved an average of 99.9% of their asking price. This is higher than in 2019, when sellers who agreed a deal within a month achieved 99.0% of their asking price.
Those properties that came onto the market in 2022 and sold last month achieved 98.4% of their asking price. Once again, this figure is higher than 2019, when sellers took just as long to sell, and suggests that vendors are still holding out for top prices, despite the market slowdown.
Cash buyers have more bargaining power and in March achieved an average discount of 1.1%, whereas mortgaged buyers in England and Wales paid 99.1% of the asking price, up from 98.2% in March 2019. First-time buyers are being spurred on by lower mortgage rates and a desire to make their first move and last month paid an average of 99.5% of a property’s asking price, up from a low of 99.0% in December 2022.
In March, 10% fewer homes came onto the market than the same month in 2019 and 2% more buyers registered to buy – as such, we are still seeing bidding wars. Last month, 32% of homes sold in Great Britain had three or more offers from competing buyers, up from 29% in March 2019 but well below the 43% figure seen in March 2022.
Studio and one-bedroom homes – which are often bought by first-time buyers or investors – have bucked the trend towards the decline in bidding wars. Last month, 29% of these properties sold with three or more offers, up from 27% in March 2022. While three-bedroom homes remain the most likely properties to be sold with competing offers, they’ve seen the biggest year-on-year decline in competition – 33% of three-beds sold with three or more offers in March 2023, 16% lower than March 2022.