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Record Number of Discounted Homes Sold in 2023

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    Half of Homes Sold in England Were Discounted in 2023

    In the past year, analysis from Hamptons Estate Agents indicates that 50% of homes sold in England & Wales were bought after a price reduction, marking an increase from 32% in 2022.

    The research reveals that 2023 was a subdued year for property investments, with approximately 1 million homes selling at reduced prices.

    Let’s look at the data in more detail.

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      What Did Hamptons Reveal About Property Price Reductions Throughout 2023?

      On average, buyers negotiating after a price cut secured an additional 1.4% discount from the final asking price.

      Notably, price reductions peaked in October, affecting 54.6% of homes sold, while December saw 51.5% of homes sold post-reduction.

      As January unfolds, an influx of price reductions is anticipated, particularly for homes that didn’t sell in 2023. Hamptons notes a shift in market dynamics as affordability improves and demand strengthens, suggesting fewer sellers may need to adjust their expectations in the coming months.

      Despite 24% of sellers in England & Wales still selling above their asking price in 2023, 55% achieved less than they initially asked.

      Buyers negotiating deals in the past year secured an average discount of 3.5%, contrasting with the 5.1% discount observed in 2009 during a period of more significant price declines.

      Additionally, the research highlights that selling a home in Great Britain took longer in 2023 than in the past decade, with an average of 56 days between listing and going under offer. Sellers, on average, experienced a 22-day increase in the time it took to find a buyer compared to 2022. We have a useful tool call the rental income calculator that helps work out some of the finance predictions for a buy to let investment.

      Read More: Want to know more about property investment market? Consider our London property investments guide or our article on Luton property for sale.

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        What Do the Number of Reductions Mean for the Buy-to-Let Market in the UK?

        The increased number of reduced properties is very telling for one of the most subdued years in recent times.

        Inflation rose significantly following the pandemic, the Ukraine crisis, and Liz Truss’s polemic mini-budget. In turn, the Bank of England raised interest rates 14 times in a row, settling at 5.25%. This sent mortgage rates sky-high, making a property more unaffordable than in previous years.

        As a result, the property market slowed, with more people choosing to rent and fewer people preparing to risk purchasing a house.

        While this seemed problematic initially, it was good news for buy-to-let investors who could purchase a property without a mortgage. Increased tenant demand and higher borrowing costs saw rental prices rise dramatically – with the average monthly figure rising by 9%. As such, the buy-to-let market has seen a substantial increase in gross yields throughout 2023.

        Yet, while rent prices rose, property price growth slowed from the rapid growth seen throughout 2021 and 2022. As the data shows, many sellers looked to reduce their asking prices to attract a buyer in a hesitant market. This meant that buy-to-let property investors could potentially find bargain properties and enjoy higher rental yields.

        Savills predicted that rents would continue to rise by 6% in 2024. In addition, the most recent Halifax House Price Index indicated that a slight price decline was likely over the next 12 months despite prices rising by 1.7% in 2023.

        We can also expect sellers to reduce prices throughout January as they attempt to conjure a sale during the typically slow winter months. Therefore, property investors may be able to find bargain buy-to-let investment in the UK – particularly in traditionally good-value areas like the North West – in the opening months of 2024.

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          How Did the Hamptons Experts React to the Number of Discounted Sales?

          Head of research at Hamptons, Aneisha Beveridge, had the following to say about the Hamptons analysis:

          “2023 will go down as a subdued year for the housing market.

          “The cost of living squeeze coupled with yo-yoing mortgage rates created an air of uncertainty and meant that households chose to sit tight rather than move. But while transactions bore the brunt of the slowdown, a house price crash didn’t materialise. Instead, price falls were limited to a maximum of 5% across the country.

          “Consequently, the housing market is entering the new year on a much firmer footing than it was 12 months ago. Although confidence could still be vulnerable to economic shocks and global events, we expect to see more prospective buyers enter the market this year, many of whom sat tight in 2023. This might start to shift the power back into the hands of those selling and should also begin to put a floor under prices, limiting the chance of further falls.”

          Discover More: For more buy-to-let inspiration, check out some of our useful area guides, including:

          Record Number of Discounted Homes Sold in 2023

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          Author

          Dale Barham

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          Dale is a property news and onsite content writer at RWinvest.

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