by Mark Johnston
The amount by which sellers have slashed their prices expectations has risen significantly over the past year.
Current data shows that over 40% of all UK property on sale in Britain at the moment has been reduced in price at least once.
It seems according to recent research that approximately two out of every five UK properties for sale have been reduced in price to entice buyers in what is currently a stagnant, struggling housing market.
Sellers are becoming more and more realistic about the value of their homes in today’s economic climate.
In November 2010, among those homes that had been reduced in price, the average price reduction was 6.1%. However figures for today stand at a whopping 7.4%, this represents a discount of nearly £5 billion off collective initial asking prices.
According to property website zoopla the average discount off the original asking price has reached a new high of over £19,500.
Whilst the London property market continues to demonstrate its resilience with the lowest proportion of price reductions in the UK, the north it seems has the largest price reductions.
Nicholas Leeming, of zoopla.co.uk said “with current economic uncertainty and the difficulty buyer’s face in finding funding, it is no wonder that sellers are having to reduce prices in order to encourage sales”.
With the latest economic forecasts for 2012 looking decidedly gloomy, it seems that sellers may still have to reduce their price expectations further if they are serious about making a move.
Although elsewhere in the property market it seems that new build property values are bouncing back up.
Many new builds lost value quickly in the credit crisis, these were mainly purpose built buy to let properties and this was due to mortgages becoming tougher in the buy to let market.
Currently though there are signs of life in new builds which are coming from first time buyers, this is due to them being helped along by schemes such as first buy and this in turn is having a positive impact on the new build housing market.
The house price index from communities and local government found that in September 2011 the average new build property sold for £201.101. This shows that the average price paid for a new build property has increased by 8.8% in the last year.
Many experts believe that the reason new builds are doing better is that builders often now offer discounts and incentives to buyer on their over inflated prices. So basically they help out with the deposit etc, which is great, but after the dust has settles the buyers may then realise that they did not get such a good deal after all.
The government has also recently announced a mortgage indemnity scheme to help up to 100,000 first time buyers buy a new build with just a 5% deposit. However Howard Archer, chief economist at HIS global insight suggested “it is too small a measure to provide significant support to house prices”.
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