The cities where asking price reductions are helping boost homebuyer affordability
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Our research team this week can reveal where homebuyers could be quids in due to a hat-trick of savings via the stamp duty holiday, a reduced mortgage deposit requirement and a reduction in the asking price of their property.
Triple-whammy of new savings for homebuyers
Stamp Duty Saving
The budget announcement on Wednesday saw the government extend the existing stamp duty holiday until June, with homes purchased up to £500,000 paying no stamp duty, while an additional extension for sales of £250,000 or less was also announced to run until September.
They also introduced a guarantee for mortgage companies providing 95% mortgage products, making the initial cost of buying a property a lot more palatable for the nation’s homebuyers.
Hotspots with reduced asking prices
In addition to this double whammy increase in purchasing affordability, Yes Homebuyers has also highlighted where across the nation offers the best chance for buyers to purchase a home with a reduced asking price.
Asking Price Reductions
We looked at how many properties currently listed on the market had reduced in price and therefore offered homebuyers a further bargain.
The research shows that across the UK as a whole, 29.2% of all homes listed for sale had dropped in price.
Top 5 areas in the country for reduced-price property
Aberdeen topped the list, with nearly half the home sellers in the area (49.8%) reducing their price expectations while on the market.
This is great news for those looking to buy. With house prices dropping, the stamp duty holiday still in place, and now a 5% mortgage deposit it seems almost impossible to not get your foot on the property ladder in some areas.
The next best location with regards to house price reduction was Portsmouth, with 38.9% of all stock available seeing a reduction in asking price in current market conditions. Southampton (38.1%) and Oxford (38.0%) followed closely behind as some of the UK’s asking price reduction hotspots.
With many now working from home and looking for more space while doing so, it comes as no surprise to see London also ranks in the top five areas for the most reduced homes. 34.1% of all properties currently listed in the capital have seen a reduction in price during their time listed on the market.
Top areas where sellers are holding firm
So where are home sellers sticking firm where asking price is concerned?
Cities in Scotland and Northern Ireland have seen the least homes reduced in price, with Glasgow seeing the lowest number as just 9.2% of homes for sale see sellers drop their asking price expectations. Edinburgh also ranks low for property stock reductions (11.5%), as does Belfast (17.7%)
Why are we seeing more reductions than normal?
It's evident from our research that areas with higher property prices are seeing a larger proportion of their stocks reducing in cost. This could be due to the fact that they are listed at an above-average price in the first instance and therefore already have the wiggle room to lower these. It may also be that the demand-to-availability ratio in the areas with the least reductions is higher, and so a price reduction is not warranted.
Matthew Cooper, Founder & Managing Director of Yes Homebuyers, commented:
“Our research suggests that a reduced asking price isn’t the warning flag many buyers might assume it to be and, in fact, it’s pretty rife across the market.
While it’s true that those struggling to sell will reduce their price expectations, there are other factors that make it a more common practice.
Estate agent over-valuations can be a problem
First and foremost, estate agents will often, if not always, overvalue a home to win business in an attempt to entice a seller away from the grasp of another agent. Once they’ve then been tied into a sole agency agreement and with little to no interest in the first few weeks, the agent will then suggest lowering the price in order to sell.
We see this as a major reason that sellers eventually reach out and use our "buy my house" service in an effort to sell their house fast. They often waste a great deal of time on the market beforehand, trying to sell for an unrealistic price the agent had said was achievable.
Some sellers intentionally set a high price
The seller themselves can also influence a reduction in asking price, starting high to chance their arm while also leaving themselves some wiggle room during the negotiation process. However, if this doesn’t have the desired results, they will then start to creep down through the price brackets until they find the sweet spot.
So for savvy homebuyers hitting the market in the coming months, there’s certainly money to be saved during the purchasing process. That is, of course, if you want to brave the huge market delays that have built up due to heightened demand in the last six months or so.”
Table shows the percentage of all properties listed in an area that have seen the asking price reduced during their time on the market:
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