5 Reasons Why We're in a Buyer's Housing Market

1. Slower Than Usual House Price Growth

This autumn, the market typically experiences a boost in property prices as many buyers look to move before the holiday season. However, this year is different. October 2024 showed only a 0.3% increase in average asking prices, starkly contrasting the typical 1.3% increase around this time. This slowdown suggests that sellers are approaching the market cautiously, and buyers are finding themselves with more negotiating power.

In real terms, October's average asking price was £371,958, compared to £370,759 in September. Such limited growth points towards a market adjusting to recent economic pressures, including interest rates and inflation, which have restrained spending power. For buyers, this means less pressure to enter into bidding wars and an opportunity to find properties priced more realistically.

2. Increased Pressure on Sellers to Price Competitively

With buyers in a stronger position, sellers need to be more strategic in setting their asking prices. Data indicates that approximately 35% of sellers in the UK have reduced their prices in 2024. This trend reflects that homes priced too high may sit on the market longer, causing sellers to lower prices to draw interest. For prospective buyers, this means there's an advantage in searching for deals, as they may encounter motivated sellers willing to negotiate. In such a dynamic market, choosing the right estate agent is crucial, as experienced agents can provide accurate pricing guidance and effective strategies to ensure a successful sale.

3. More Homes on the Market Than Last Year

Compared to the same period in 2023, buyers now have 12% more homes to choose from. This increase in inventory has created a more competitive market for sellers, with buyers benefiting from an expanded selection. According to recent market data, the current number of listings per agent has been the highest since 2014, further emphasising buyers have greater options.

What More Choice Means for Buyers

• Less pressure to rush into a purchase
• Greater opportunity to compare properties
• More negotiation power with motivated sellers

The rise in inventory levels shows a balanced market, making it easier for buyers to find properties that meet their needs without high demand pressure.

4. Homes Are Taking Longer to Sell

With the increased supply of available properties, buyers have more time to consider their options. Recent figures show the average time for a property to sell has gone up to 61 days, a gradual increase from 59 days in August. This added time on the market allows buyers to thoroughly evaluate listings, often leading to more favourable conditions for those seeking the best deals.

Benefits of Longer Selling Times for Buyers

• Less competition for each listing
• More time for property inspections and evaluations
• Potential for price negotiations

This trend indicates that the urgency felt in previous years is tapering, granting buyers the upper hand.

5. Affordability Pressures on Buyers Are Easing Slightly

Affordability remains a challenge in the housing market, but there are signs of slight improvement. For instance, average monthly payments for first-time buyers have increased by £350 since 2019 due to higher mortgage rates, but this figure has dropped by £150 from the peak rates in 2023. Additionally, while energy prices rose by 10% in October due to a revised price cap, the overall market is expected to stabilise with potential government relief in the coming months.

For buyers, this affordability shift could mean:

• Increased negotiating power in the market
• A potential window to lock in lower rates if mortgage costs decline
• Less pressure to secure a home quickly due to stabilised interest rates

Looking Ahead: What's Next for the Market?

With the Autumn Budget on the horizon, prospective buyers are watching closely for signs of further mortgage rate adjustments. Two more decisions from the Bank of England on interest rates are anticipated before the end of the year, and both could impact market conditions. Rightmove's property expert Tim Bannister notes, "Despite a Budget-shaped cloud on the horizon, the big picture still looks positive for the market heading into 2025. Market activity remains strong, despite affordability pressures on movers. Once we have more certainty about the contents of the Budget, hopefully followed by speedy second and third Bank Rate cuts, we could see another surge in market optimism like we had in the Summer."

For tailored advice, Farrell Heyworth can provide guidance based on local market insights to help buyers and sellers make informed decisions in this evolving landscape.

References:

• National Association of Realtors
• Office for National Statistics
• Financial Times
• BBC News
• Rightmove