The intensifying volatility in Britain’s mortgage market has hit the property sellers hard. It’s forcing them to discount their asking prices, reported Gulf News Business. Providing discounts or bringing changes to their property selling strategy is to ensure they don’t risk deals falling through.
The mortgage crisis has been intensified by economic uncertainty, high borrowing costs, and a significant cost-of-living crisis affecting the country.
In response to the changing dynamics in the UK property market, properties worth £5 million or more saw a twofold increase in price reduction in the year leading up to July, compared to the same period in 2022. In addition, LonRes—a leading data source and network for property marketers—reported a plunge in transactions in July in London’s prime property market compared with the same month in 2022.
The result is that these market fluxes have led to a discrepancy in price expectations between property buyers and sellers.
“While the volatility of the mortgage market has less direct impact in this equity-driven sector, it undoubtedly affects sentiment, creating uncertainty among both buyers and sellers alike,” said Nick Gregori, head of research at LonRes.
Some sellers are struggling to adjust their expectations to match the reality of the market. However, others are unwilling to lower their asking prices. It’s causing more deals to fail in London. During the forecast period between January and July, the number of high-value transactions that collapsed in the capital increased by 15% compared to the same period in the earlier year.
Consulting high-end real estate services like Quintessentially Estates can benefit sellers in the fast-changing real estate market. Such services can help with property valuation. They also provide market current market insights, and curate thought-out property marketing strategies. These expert real estate agents ensure the clients’ deals stay on track.
Nevertheless, London’s luxury property market is less affected by the volatile mortgage market. It’s still showing signs of resilience and stability even though uncertainties have slowed the broader, lower-priced property deals. Wealthy cash buyers are a promising sign for London’s luxury property market. They show that high-value properties in the city continue to be sought after, and the market remains a perennial favourite among ultrarich investors.
If the economy improves and the current fast-rising borrowing costs show signs of stability, the market could see a great close to the year. However, if the recent mortgage volatility persists, the market will tumble more, with property dealings staying low and property values facing more pressure.
“If borrowing costs have settled down by then and the economy starts to perform better, we could see a stronger close to the year,” LonRes predicts. “But if the recent volatility continues it is likely transaction numbers will remain suppressed and values could come under more pressure.”
Sohela is an electrical engineer and a self-professed writer with a keen interest in all things tech. When she’s not writing killer content pieces, you’ll find her enjoying tempting foods in her favourite restaurants.