Sellers will likely witness house prices reduce by 5% in 2023 as the housing market weakens, with sales volumes set to drop by 300,000 to 1mln, according to property website Zoopla.
At 7.8%, current house price inflation is at its lowest since November 2021, Zoopla noted in its report, which also revealed that buyer demand is down 44% year-on-year.
In recent weeks, the average price has been 3% below the seller's asking price, while for 2021 and the first half of this year, the average price matched the asking price.
One in 10 homes has recorded a price reduction of 5% or more since the beginning of September, while a quarter have seen prices drop to some extent, Zoopla said.
Southern England saw the greatest reductions in asking price, following a 50% drop in sales volumes for houses with expensive mortgage rates.
As 2023 begins, mortgage rates should drop to 5% from the current 6% average for 2- and 5-year fixed deals, Zoopla believes.
There are 40% more homes on the market than last year, but this is still 20% lower than pre-pandemic levels, it said.
“The housing market is adjusting to a reset in the level of mortgage rates but the likelihood of double-digit house price falls at a UK level remains low,” said Richard Donnell, executive director at Zoopla.