Fall in new seller asking prices as year ends

As the year comes to a close, we usually see a slight seasonal drop in average house prices as home-buyers put their moving plans on hold until the New Year. This month, we’re seeing sellers price even more competitively to attract buyers during the busy festive period.

Average asking prices have fallen this month by 1.9%, taking the national average asking price of a home to £355,177. However, there are lots of variations in each region and country. In seven out of 11 areas across Great Britain, average new seller asking prices are actually higher in compared to a year ago. The North West region leads the way with average asking prices 1.5% higher than last year. However, in the South East, prices are now 3.7% lower than a  year ago.

To find out how much asking prices are where you live, you can check the map within our full report here.

Why have asking prices fallen in December?

Average prices usually fall in December due to seasonal factors. Sellers who come to market at this time of year often have a pressing reason to sell and need to find a buyer quickly, and therefore price more attractively to capture the attention of festivity-distracted buyers. But this month’s drop is bigger than the previous 20-year average of 1.5% as sellers get more competitive.

Our property expert Tim Bannister says: “Further price falls beyond the usual seasonal trends that we’d expect at this time of year signal that some new sellers are continuing to act on the advice of estate agents to price competitively.”

What’s happened to house prices during 2023?

We entered this year under a cloud of uncertainty, as the fallout from the Autumn mini-Budget filtered through to lower activity levels. Higher mortgage rates have been a key challenge for home-movers this year, and this is likely to carry into next year.

Tim says: “For now, there appears to be more calm and certainty heading into 2024, and the annual fall of 1.1% in asking prices highlights the market’s much-better-than-predicted resilience this year.”

With improved stability in the housing market as we head into 2024, there are signs of that some home-buyers who had put their plans on hold during the fallout from the mini-Budget, are now ready to put their moving plans into action.

We’re seeing early signs of more activity in the ‘family mover market’, with demand for three and four-bed homes (excluding four-bed detached houses) up by 9% versus the post-mini-Budget period of this time last year. This compares to a 6% rise in buyer demand across all sectors.

What are the current UK mortgage rates?

Average mortgage rates have now fallen for 19 consecutive weeks, with the average 5-year fixed mortgage rate now 5.11% compared to 6.11% in July. With the mortgage market more settled and the expectation being that the Bank of England Base Rate has peaked, those looking to move up the ladder and take out a larger mortgage may now feel in a stronger position to act.

You can check the current UK mortgage rates here.

What does this mean if you’re thinking of selling your home?

While we’re seeing early signs of more demand from home-movers in the family mover market, first-time buyers will also be needed to keep the market moving and form the bottom of chains.

Home-sellers still need to price more aggressively than their local competition to secure a buyer, especially those with a pressing need to sell. While current trends suggests that the mortgage market will be more stable, interest rates are likely to remain elevated next year, continuing to put pressure on buyer affordability.

What the ‘Boxing Day bounce’ can mean for home-sellers

Potential movers who have been waiting for calmer conditions in the housing market may decide to act in the early part of next year.

If you’ve been thinking of selling your home, December is a great time to get your listing ready. You can get an instant valuation to find out how much your home is worth here, and check out how much homes have recently sold for in your area. A huge number of would-be buyers view homes for sale on Rightmove over the festive season, and people tend to set up home viewings in the first weeks of January.

Tim says: “There’s always a big post-Christmas upturn in Rightmove traffic, with early bird-buyers starting their search on Boxing Day. This year’s upturn will be eagerly anticipated by those who are keen to sell, especially family movers who are considering having an estate agent board put up as the Christmas tree comes down.

“Our research, along with feedback from estate agents, tells us that the best strategy to sell in the current market is to price temptingly at the outset of marketing, rather than testing the waters with a higher price. This will hopefully avoid the need to reduce your asking price later, and capture that early-bird buyer’s interest in the New Year, whilst also avoiding the stress of drawing out the selling process and risking having the for-sale board still up at Easter.”

And what if you’re thinking of buying a home?

Buyers are much more likely to see a choice of homes for sale in their area that suits their needs compared to the stock-starved pandemic years. Buyers coming to market in 2024 are in a strong position to negotiate on price and take more time to choose the home that’s right for them.

However, the number of available homes for sale has only just increased to pre-pandemic levels and there are no signs of a wave of new listings which would create a glut of homes for sale. With more choice and fewer buyers, sellers who are willing and able to price competitively will attract buyer’s attention.

Josephine Ashby, Managing Partner of John Bray Estate Agents in Cornwall, says: “Our advice to both buyers and sellers is to be realistic with expectations, it is potentially an easier market for buyers in prime areas with more choice and less pressure.”

If you’re thinking about moving in 2024, a good way to find out how much you could borrow is to use a mortgage calculator. And to get a personalised result by applying for a Mortgage in Principle which will take you one step closer to a mortgage offer.

You can also take a look at the different types of mortgages and how to choose a mortgage term that meets your needs, both now and in the future.

What will happen to house prices in 2024?

The housing market is continuing to return to more normal levels of activity following the frenetic post-pandemic period. Next year, we predict that average new seller asking prices will be 1% lower nationally by the end of 2024, as competition increases among sellers to find a buyer.

Our property expert Tim Bannister says: “The underlying level of good demand at the right price makes it unlikely that we will see a more significant drop in prices next year.”

You can read our housing market forecast for 2024 here.

READ MORE: What are the current UK mortgage rates?

The header image of this article is provided courtesy of Stride and Son, Chichester