Home sellers across the UK are accepting substantial reductions from their original asking prices as higher mortgage rates and an increase in available properties make it harder to attract buyers.
Data from estate agency Knight Frank shows that homes completing the exchange of contracts between July and September sold for an average of 90.6 per cent of their initial asking price, representing a discount of almost 10 per cent.
At that rate, a property originally advertised for £300,000 would sell for approximately £271,800, while a home listed at £500,000 would fetch around £453,000.
Buying agents say some purchasers are negotiating even larger reductions, with discounts of up to 26 per cent reported on certain properties. Small flats, newly built homes and former buy-to-let properties are among those offering opportunities for buyers seeking lower prices.
Buyers Secure Discounts of Up to 26 Per Cent
Jo Eccles, founder and managing director of prime London buying agency Eccord, said her firm recently negotiated a 26 per cent discount on a property in southwest London.
She attributed the result partly to the seller initially setting the asking price too high and allowing the property to remain on the market for an extended period.
“In overpricing to begin with and sitting on the market for some time, the seller was on the back foot and we were able to capitalise,” Eccles said.
The figures mark a change from conditions in 2021 and 2022, when demand was supported by the pandemic-era stamp duty holiday, the search for larger homes and relatively cheap mortgages.
According to Knight Frank, sellers achieved an average of 100 per cent of their original asking prices between July and September 2022.
Expensive Properties Face the Biggest Price Cuts
The higher end of the housing market is experiencing particular pressure, with expensive properties taking longer to sell and attracting fewer buyers.
Data from TwentyCi showed that homes priced at £2 million or more were half as likely to sell as properties below that threshold. They also took twice as long to secure a buyer and sold at an average discount of almost £250,000.
Jonathan Hopper, of buying agency Garrington Property Finders, said the largest price reductions were often seen in prime locations, particularly London.
Garrington’s analysis found that fewer than four in 10 homes listed in London found a buyer between July and September.
In postcodes where properties were priced above £1 million, there were 3.6 homes listed for sale for every property sold. Only 28 per cent of listed homes in those areas found a buyer during the three-month period.
The analysis also found that for every 100 sales agreed, 62 properties were withdrawn from the market. That was twice the national rate, suggesting that many sellers had decided to abandon their attempts to sell.
Sellers Face Difficult Decisions Over Asking Prices
Hopper said the figures highlighted the challenges confronting owners of high-value properties.
“Rather than seeing their home sit unsold, sellers often face an awkward choice between coming off the market or slashing the price,” he said.
He also identified a negotiating pattern emerging among sellers in southern England, which he described as a “discount two-step”.
Under this approach, sellers initially reduce their asking price to attract interest and encourage viewings. They then agree to a further reduction during negotiations with a prospective buyer.
Why Some Properties Are Listed Above Their Market Value
Sellers often set ambitious asking prices because they want to secure the highest possible return on their property.
In some cases, estate agents may agree to those prices because they risk losing the opportunity to represent a seller if they recommend a lower valuation.
Other agents may quote an inflated price to win an instruction, hoping to persuade the owner to accept a more realistic figure once the property has been on the market for some time.
Eccles said asking prices did not always reflect what a property was worth in current market conditions.
“This is a really tricky market to navigate, because a discount from the asking price set by the seller or their agent isn’t necessarily a discount from the true value,” she said.
She explained that some owners based their asking prices on what they had originally paid, adding stamp duty and the cost of improvements carried out during their ownership.
In other cases, selling agents set higher prices to win business from competitors.
“In both these scenarios, the asking price is not a true representation of market value today,” Eccles said.
How Buyers Can Negotiate a Lower Property Price
Buyers may have greater scope to negotiate when properties have been on the market for a long time or when sellers have received little interest.
However, buyers are advised to research conditions in the specific neighbourhood rather than relying solely on wider regional or national housing trends. Demand can remain strong in particular areas even when the broader market is slowing.
Hopper said buyers should investigate whether an asking price was realistic and understand why the seller wanted to move.
“Asking prices are a seller’s aspiration and a starting point for negotiations. Smart buyers will do their homework to get a handle on how realistic the asking price is, and to figure out the seller’s motivation,” he said.
He added that understanding the seller’s circumstances could help buyers make offers that were more likely to be accepted, even if they were below the advertised price.
Signs That a Seller May Accept a Lower Offer
According to Hopper, buyers should look for indications that a seller is under pressure to complete a sale or has struggled to attract serious offers.
Where previous offers have been rejected, prospective buyers should try to establish why. If a property has received no offers for an extended period, the seller may become more willing to negotiate.
Hopper said buyers who were financially prepared and serious about proceeding could be better positioned to take advantage of such circumstances.
Eccles also advised prospective purchasers to ensure they were ready to proceed before submitting an offer.
She recommended providing clear information about the buyer’s circumstances, including their reason for purchasing, solicitor, mortgage lender, financial position and preferred timescale for exchanging contracts and completing the transaction.
Buying Agents Advise Against Aggressive Negotiation Tactics
Eccles cautioned buyers against turning negotiations into an argument about whether a property was worth its asking price.
Rather than confronting an estate agent with comparisons against other properties, she advised presenting an offer tactfully and explaining why the buyer was a reliable choice.
She said sellers could be sensitive about accepting less than they had hoped for, particularly when they risked making a loss on the sale.
Eccles added that an aggressive approach could damage goodwill and leave sellers concerned about how the buyer might behave during the purchase process.
She recommended explaining the limits of a buyer’s budget respectfully while demonstrating a genuine commitment to completing the transaction.
Mortgage Rates Rise Amid Inflation Concerns
Mortgage rates have increased as the conflict involving Iran has raised inflation expectations and reduced hopes of interest rate cuts.
Homebuyers and homeowners whose existing fixed-rate mortgage deals are approaching expiry have been advised to review their options as soon as possible.
This Is Money has a partnership with fee-free mortgage broker London & Country Mortgages (L&C), which provides advice and access to mortgage deals from more than 90 lenders.
Prospective borrowers can use the This Is Money and L&C mortgage rates calculator to compare deals based on property value, mortgage size, loan term and preferred fixed-rate period.
They can also use L&C’s online Mortgage Finder to search available mortgage products.
Mortgage services are provided by London & Country Mortgages, which is authorised and regulated by the Financial Conduct Authority under registration number 143002. Most buy-to-let mortgages are not regulated by the FCA. Failure to keep up with mortgage repayments could result in a property being repossessed.
