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Mortgage rate rises have been bad news for homeowners, but there is a flipside for buyers.
The rate increase appears to be dampening the housing market, with four in 10 sellers shaving more than 5% off house prices to make a sale, research shows.
This is the highest discount Zoopla has seen since 2018.
Approximately one in six sellers are having to shave more than 10% off the asking price, the property website said.
Why is this happening?
Rising mortgage rates mean 70% of house hunters have less purchasing power, Zoopla reported.
They have less to spend and some are being squeezed out of the market altogether, meaning there is less competition.
“Our view remains that 5% mortgage rates represent a tipping point, beyond which house prices will post annual price falls with lower sales volumes,” read a Zoopla report.
Last week, the Bank of England Base rate jumped from 4.5% to 5%. As we reported yesterday, forecasts currently say it will peak at 6.25% in December.
Zoopla added there are some signs that the number of homes for sale is starting to grow at an above-average rate, which gives buyers more room to negotiate.
It said sales momentum over the first half of this year “is not going to be maintained” in the second half.
Where can buyers benefit?
According to Zoopla, falling prices will be concentrated in the most expensive markets and those where prices have risen the most in recent years.
The East Midlands and the East, South East and South West of England will be most likely to see decreased prices, it said.
The number of new sales being agreed continues to run above average in Scotland, the North East of England and London.
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