Driving a hard bargain
Market uncertainty looks to be shifting the balance of power from sellers to buyers.
As affordability has deteriorated, fuelled by an insufficient growth in the supply of new homes, some form of adjustment to house prices was always a possibility, particularly in the areas which have seen the fastest growth. The vote to leave the EU has increased uncertainty about economic prospects and acts as a catalyst to changes in house prices as buyers and sellers factor weaker conditions into their negotiations.
Data on the ratio of asking to achieved prices shows that there has already been some impact on prices since the referendum. The ratios of asking to achieved have softened in most parts of the UK reflecting price negotiation in the face of the uncertain times ahead, with the largest effect in London. Of course when dealing with homes, individual characteristics vary so much that averages may not tell the full story. Some properties still fetch above the asking price, despite the average ratio of asking to achieved price being 97 per cent. But the softening theme on prices is clearly backed up by looking at the change in the proportion of properties where sales have reached a price above the asking.
And, what is more revealing is that it is higher priced property that has seen the biggest effect altogether. Property priced at over £2million has seen the percentage of initial asking price achieved fall from 97 per cent in June, broadly unchanged on July 2015, to 92 per cent in July after the referendum. And this is also reflected in the sales agreed over the asking price falling from 20 per cent in July 2015 to 14 per cent in July 2015.