More encouraging economic news coupled with the traditional post-summer holiday bounce back, kicked off the September market.
One of the significant drivers behind this was the decline in mortgage rates. Mortgage rates continued to fall throughout September as better than expected inflation data reduced the appetite for further Bank of England rate hikes. This shift sparked a newfound confidence, particularly among households who had previously been priced out by higher mortgage rates. Consequently, it was smaller, more affordable homes where the market strengthened post-summer holidays.
Achieved prices
Across England & Wales, the average home sold last month achieved 99.1% of its final asking price, up from 98.5% in August. This meant that sellers achieved closer to their asking price than in any month since October last year.
Both mortgaged and cash buyers were prepared to pay a little closer to the asking price, however the biggest uplift came from those reliant on borrowing. As the number of lenders cutting rates gained momentum, buyers with the largest deposits were once again able to lock in sub 5% rates. Smaller, more affordable homes, where buyers are most likely to use a mortgage, saw a bigger monthly strengthening in the ratio of asking to achieved prices than the top end of the market.
This trend was particularly true in London, where buyers are disproportionately reliant on mortgages. Here, sellers saw a bigger rise in the share of the asking price they achieved than the rest of the country. The average London home sold for 98.5% of its asking price last month, 0.6% up on the previous month.
Days to sell
September also saw more homes sell within the first week of marketing. Nearly one in ten (9.5%) homes that came onto the market in Great Britain last month went under offer within a week, up from 6.2% in August and 7.0% during the same time last year. There was less of an uplift in the capital where 7.5% of homes sold within a week, roughly the same proportion as this time last year.
Despite this improvement, the average home sold in September had been on the market for 57 days. This made it the slowest September to sell a home in Great Britain since 2012. However, this is a more backwards-looking metric and reflects the fact that some homes that had been on the market for a while went on to sell. One-bed flats saw the smallest year-on-year increase in the time it took to sell (+5 days), whereas it took around a month longer to sell the average 4-bed+ home.
The opposite was true in London, where the average larger home sold faster than a smaller one. The average home with four or more bedrooms in the capital went under offer 36 days quicker than the average one bed.
Price reductions
As the market cooled, price reductions have become increasingly common. More than half (54%) of homes in England & Wales that sold in September had undergone a +£1 price reduction. This marked only the second month since the beginning of 2016 that more than half of sold homes had previously been reduced.
However, these homes had been on the market for an average of 77 days before the seller reduced the price, up from a norm of around 57 days pre-Covid. This suggests that some older stock is selling where it’s priced realistically, rather than marking a further slowdown in the market.
Given that London homes have not seen the price growth witnessed elsewhere over the last few years, they also haven’t seen price reductions accelerate as much. While in 2021 and 2022 price reductions were more common in London than elsewhere, that gap has pretty much closed. 55% of homes sold in the capital last month had previously undergone a price reduction, compared to 54% in England & Wales.
Looking ahead
It's been the number of homes sold rather than their price which has borne the brunt of the slowdown. However, it seems increasingly likely that stock levels have peaked following a surge last year driven by homes taking longer to sell. With fewer homes entering the market, buyers are left with less choice than they had a few months ago, which, in turn, is helping to stabilise prices.
While many sellers have proved reluctant to chase the market down, improved affordability, predominantly due to lower mortgage rates, and a brighter economic outlook may help both buyers and sellers find more middle ground. All these factors point towards the end of the year looking a little rosier than the beginning.
