A new report from Zoopla shows that the average discount is at a five-year high, with property sales being agreed at 5.5 per cent lower than asking price. This has increased from 3.4 per cent in the first half of this year.
This 5.5 per cent discount equals an average £18,000, which is even more than in 2018. That was the last time housing demand and price inflation weakened.
The property website says this shows more realism among people selling their home. Sellers are accepting ever-larger discounts as greater supply puts pressure on them to attract a buyer.
Affordability is most stretched in Southern England, which is giving buyers here the most negotiating power. In turn, this is creating bigger discounts to asking prices - which average 6.1 per cent or £25,000 - in London and the South East.
The average discount is 4.8 per cent or £11,000 across the rest of the UK, which is still the highest in recent years.
Some sellers are accepting even bigger discounts. Zoopla says one in four sales agreed are more than 10 per cent discounts off the asking price. This trend reflects the fact that sellers are initially pricing their home higher than is achievable.
The portal says the average house price in the UK is £264,600 with property prices falling by 1.2 per cent compared to a year ago. And as more sellers set their asking prices lower to achieve faster sales, discounts should return to normal levels of three to four per cent, Zoopla forecasts.
However, it adds that house prices are not falling any faster in the highest value markets at present - an unusual state of play when prices are dipping in the mainstream market.
In fact, annual house price falls in London are lower than in adjacent commuter areas and in the wider South East. Even so, the average value of a London home is just eight per cent higher than seven years ago. For the rest of the UK, this figure is 28 per cent higher.
Zoopla’s research director Richard Donnell suggests that after slower price growth than the rest of the UK for six years, London homes are now better value for money. A steady return to office working is also supporting sales and pricing, with new sales rebounding more in London in the last two months than anywhere else.
These trends have resulted in positive 0.6 per cent annual price growth in the EC postal area, which covers almost all of the City of London and parts of Islington, Camden, Hackney, Tower Hamlets and Westminster.
Buyer demand is 10 per cent higher than a year ago when the disastrous Liz Truss mini-budget hit. But it’s low compared to normal market conditions - sitting 13 per cent lower than in 2019.
Meanwhile, Zoopla says there are 15 per cent more agreed sales than a year ago and five per cent more than in 2019. The portal still expects some one million sale completions in 2023.