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Buyers negotiate harder as discounts to asking price increase

The gap between asking and selling price has increased across cities as home buyers negotiate harder on the property price.

Bigger discounts are negotiated by buyers according to the Cities House Price Index from Hometrack with average prices 3.8% lower than the asking price for the first quarter of 2019, up from 3.3% in the same period last year.

The gap between the asking and selling price has been increasing in all UK cities as price growth weakens with London the slowest with -0.5% for the year.

Larger discounts is good news for first time buyers as they would require a lower deposit or smaller mortgage to get on the property ladder.

With weakening city house price growth, it may be easier for remortgage buyers to stay in your existing home if you can and avoid the cost of moving.

Biggest discounts found in London

London has led the slowdown in UK house prices with the average discount to the asking price widening from 1% in 2016 increasing to 4.8% for 2018 and now 5.7%.

Inner London has seen the biggest asking and selling price gap with an average of 7.6% and in some boroughs it is double digits with outer London and commuter areas with average discounts of 5.1%.

The following table from Hometrack shows current house prices for regional cities and growth for the year to April 2019.
City Average house price Annual change
Glasgow £125,200 5.1%
Leicester £177,600 4.9%
Liverpool £122,200 4.9%
Manchester £169,700 4.5%
Nottingham £154,600 4.5%
Sheffield £138,700 4.4%
Birmingham £165,500 4.3%
Belfast £134,200 4.2%
Edinburgh £227,800 4.0%
Leeds £166,400 3.5%
Cardiff £207,700 3.1%
Newcastle £128,700 2.6%
Bristol £280,400 2.5%
Oxford £410,000 1.8%
Portsmouth £239,500 1.0%
Bournemouth £289,900 1.0%
Southampton £227,800 2.8%
Aberdeen £162,300 0.7%
Cambridge £424,400 -0.2%
London £482,900 -0.5%
The highest city growth rates are in the north of the country with Glasgow leading with house prices up 5.1% followed by Leister and Liverpool higher by 4.9% with Manchester and Nottingham rising 4.5% over the year.

Growth in the north of the country is from a low base with average property values in Glasgow at £125,200 and Leister at £177,600.

If you are a buy-to-let landlord with existing properties in North England and Scotland, the rise in house prices creates more equity which you can benefit from if you sell in the future.

For home movers leaving areas with high property values such as the South East to areas with lower values, they may have extra equity for a deposit to buy a larger home or can reduce their mortgage.

House price growth tracks earnings

In the long term house price growth tracks earnings which have stagnated in southern England and the slowdown is extending to the north of the country.

The fastest growing city in 2014 was London where house prices were rising at 18% per year and again with higher demand from investors to beat the stamp duty changes introduced in April 2016.

House prices in London remain the highest in the country by some margin averaging £482,900 and the considerable value in properties allows the equity release mortgage buyer to access money for home improvements and holidays of a lifetime.

There has been strong house price inflation relative to average earnings for the past 5-7 years supported by low mortgage rates increasing buying power for new purchases.

Mortgage rates bottomed out two years ago at 1.5% and affordability regulations have limited households ability to pay higher prices.

As lower mortgage rates are fully priced into the property market future house price inflation should track the growth in earnings in the long term as is happening in London and Hometrack is expecting sales volumes to tick upwards.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or a buy-to-let investor.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to gift to a family member or reduce inheritance tax owed by your beneficiaries.

Learn more by using the property value tracker chart, mortgage costs calculator and equity release calculator. Start with a free mortgage quote or call us and we can take your details.

Mortgage Best Buys

These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.

1.17% Fixed Rate
60% Loan to Value
£1,025 App Fee
Until 31/09/2022
Reverts to 3.59%
1.18% Fixed Rate
60% Loan to Value
£1,034 App Fee
Until 31/10/2022
Reverts to 3.59%
1.16% Fixed Rate
60% Loan to Value
£1,525 App Fee
Until 01/11/2022
Reverts to 4.09%
1.19% Fixed Rate
60% Loan to Value
£999 App Fee
2-Years Time
Reverts to 3.59%

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    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.


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