November marked a clear turning point for the housing market as both buyers and sellers adjusted to the new backdrop. While less activity took place, buyer and seller expectations are adjusting quickly, which may provide upside for transactions taking place in the medium-term.
Just under one in four (24%) sellers accepted an over asking price offer in November, down from 30% in October and 35% in November 2021. Meanwhile the average home sold in England & Wales last month achieved 98.8% of its asking price, the lowest figure since January 2021.
That said, with a similar number of homes coming onto the market as in November 2021, the continued lack of stock means that sellers are still selling homes closer to their asking price than pre-Covid. Back in November 2009, when prices were falling, asking to achieved averaged 96.7%. Despite the economic pressures on households, we don’t expect asking to achieved figures to drop this far – partly due to the lack of supply, but also because we can already see signs that new properties coming onto the market are being priced to reflect this new normal.
In a reversal of a couple of tough years, vendors selling one beds are now achieving closer to their asking price than larger homes. Meanwhile all other bedroom types have seen a slowdown. As mortgage rates have risen, higher repayments are causing buyers to forfeit space in order to climb onto the housing ladder, boosting demand for smaller homes.
The time it took to sell a home in Great Britain crept up in November, but again, remains below pre-Covid averages. The lengthening time to sell is also being reflected in rising stock numbers. We think that 95% of the increase in stock (the number of homes available to buy) is due to homes staying on the market for longer, rather than more homes being put up for sale.
So far it’s homes in middle-income areas that have seen the biggest increases in the time it takes to sell. Areas which are 10-20% more deprived than average have seen time to sell increase by 25 days compared to last year. This reflects middle England being squeezed hardest where would-be buyers are most exposed to rising mortgage rates given their limited equity coupled with the wider cost of living crisis.
These buyers typically have below average incomes, but still earn too much to qualify for any state support. Meanwhile the average time it took to sell a home in the 10% most affluent areas of the country also rose, but more slowly. This is because more of these households are discretionary sellers who are willing to sit tight until a buyer offers the right price.