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"Some sellers are simply not in a position to accept reduced offers"

ended 21. August 2023

Asking prices saw their sharpest August fall since 2018 as sky-high mortgage costs put buyers under pressure, according to new figures published by Rightmove today. The portal said average new seller asking prices fell by 1.9%, or £7,012, on average to £364,895 this month.

Though many sellers are clearly recalibrating to current housing market conditions, experts have said the refusal of some sellers to lower their asking price is being driven by financial necessity rather than stubbornness.

Ranald Mitchell, director of Norwich-based independent mortgage broker, Charwin Private Clients, said: “Some sellers are simply not in a position to accept reduced offers, with debt secured to the hilt on their properties. Many people have built a lifestyle based on ultra-low rates and they are now in a corner."

Clive Read, owner at Essex-based mortgage broker, Goldmanread, mirrored Mitchell's verdict: “British households have taken on unprecedented levels of household debt while interest rates have remained so low. For some sellers, the only way out of this debt trap is achieving a certain price level for their house, which they may be unable to deviate too far from."

Darryl Dhoffer, founder of Bedford-based The Mortgage Expert, reminded sellers that they can mitigate the impact of reduced sales prices by negotiating hard on their next property: “For the home movers out there, everything is relative, so a sensible selling price means they can also negotiate a sensible purchasing price, and I would highly recommend working with reputable agents that understand this process.”

Meanwhile, Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial, warned that sellers playing hardball could be hit harder financially: “Those that price competitively are more likely to sell their homes quickly and without needing to reduce and become involved in a protracted negotiation. Sellers who find it difficult to adjust expectations downwards could see a more negative outcome overall.”

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9 responses from the Newspage community

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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Sellers and estate agents are now pricing to sell property quicker. In a market with ever-growing uncertainty, opportunistic sellers with inflated prices are not being taken seriously. With the cost of mortgage borrowing higher than before, I would expect to see offers from customers who are "near misses", namely those with maximum mortgage borrowing falling short of the asking price but worth putting the offer in, especially if they are chain free. Some sellers are simply not in a position to accept reduced offers, with debt secured to the hilt on their properties. Many people have built a lifestyle based on ultra-low rates and they are now in a corner.
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Clive Read
Owner at Goldmanread
Recent rate rises are clearly now impacting house prices. Sellers who refuse to acknowledge this new reality will likely languish on the market unsold for a longer period. Estate agents facing excess stock will be eager to advise vendors to price realistically and are unlikely to take on sellers with unrealistic price expectations. The market may continue to fall and buyers know this, so the issue for sellers is that if they price too high they'll remain unsold as prices potentially continue to slide. British households have taken on unprecedented levels of household debt while interest rates have remained so low. For some sellers, the only way out of this debt trap is achieving a certain price level for their house, which they may be unable to deviate too far from.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
With rates still rising, the housing market was always going to retreat. This data could be the first in a list of bad news in the market. If rates remain high for a sustained period, we could see falls of 20% as buyers demand cheaper prices as finance is more expensive. There is a lot of property hanging around on portals, as sellers don’t want to budge on prices. Those that price competitively are more likely to sell their homes quickly and without needing to reduce and become involved in a protracted negotiation. Sellers who find it difficult to adjust expectations downwards could see a more negative outcome overall.
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Riz Malik
Independent Financial Adviser at R3 Wealth
Sellers need to understand that they do not hold the cards in this market. Even properties that have sales agreed are popping up back on the market for one reason or another. Those who do not price according to the current market are going to be tomorrow's stale listing and you want to avoid that at all cost.
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Darryl Dhoffer
Founder at The Mortgage Geezer
Sellers need to accept that they no longer hold all the cards when selling their properties and need to be realistic in pricing their homes, to entertain sensible offers. For the home movers out there, this is all relative, so a sensible selling price means they can also negotiate a sensible purchasing price, and I would highly recommend working with reputable agents that understand this process.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Whilst the lowest asking prices for five years make a great headline, the 1.9% drop is more of a gradual correction than the house price crash often talked up. It will take a much bigger drop than this to counteract the rising costs of borrowing and spending power of wages that are pushing down demand. More and more borrowers, when their mortgage deal ends, will decide to sell and downsize to help keep mortgage repayments affordable, so I would expect to see house prices continue to drop on average, but again on a more gradual slide rather than a large-scale drop.
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Justin Moy
Managing Director at EHF Mortgages
Finally, the data is starting to catch up with the current market trends. Many sellers are still holding out for high prices that are not achievable, buyers are not able to afford the higher rates and their borrowing capacity is truncated, too. The only outcome will be lower prices in the short term, but if prices are realistic to start with, there are still first-time buyers willing to get on the property ladder. We have continued to see some good levels of enquiries, especially in areas where rent costs on equivalent properties remain high.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
Partly, this is seasonal where asking prices traditionally get squeezed in the usual summer holiday slowdown but I think we are seeing a trend where vendors are being a bit more realistic with pricing. Sold prices have remained relatively steady year-on-year whilst asking prices were still going up so it was only a matter of time before this correction came. It doesn't appear to be anything more sinister than this really with a fairly steady housing market bubbling along nicely.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
The COVID-era property bubble is now deflating, rather than bursting. The huge, record-breaking growth in property prices we saw during that period, partly fuelled by ultra-low interest rates, but also due to changes in working patterns, a drive for outdoor space and the stamp duty holiday, means average prices are falling away and properties are returning towards their pre-pandemic values.