New research from online property portal Zoopla has revealed to Simon Morris that UK asking price discounts for residential properties have hit their lowest level since 2010.
Profiting from residential property
Figures from the Office for National Statistics show that the average UK house price increased 5.5% in the year to April 2015. This suggests that investors in residential property would reap a profit if they chose to sell their property at this moment, but this isn’t always the case.
Just because the average house price is growing, it doesn’t mean that an investor will receive the average price or higher when they sell a residential property. There are a number of factors which can drive down the asking price of their property e.g. location, and this can force them to sell their property at a loss.
Average property discount hits 6.05%
Recent research from Zoopla has shown that the average residential property for sale is now discounted by 6.05%; the lowest rate since 2010. Yet in some areas, the average property for sale is discounted by almost 10%. The average property for sale in London is discounted at 7.4%; meaning that typically, discounts in the UK capital exceed £75,000.
Meanwhile, the Zoopla research also revealed that over two in five properties in the North of England are listed at a reduced asking price. Every one of the top ten areas with the highest percentage of properties with reduced asking prices is located in the North of the country, with Rotherham topping the list at 43.6%. Preston followed the South Yorkshire town at 43.2%, whilst Barnsley came third at 42.3%.
Good news for vendors?
Lawrence Hall of Zoopla explained what this means for buyers and sellers who are looking to engage in the UK residential property market. Hall commented: “Buyers may be disheartened by the decrease in the typical discounts on offer but can take cheer from the fact that almost a third of houses are listed today below their original asking price.”
He was quoted by Property Wire continuing: “This means that despite ever increasing house prices, there is still room for some good, old-fashioned negotiating. On the flip side, vendors can be pretty confident of achieving close to their initial asking price.”
Meaning for investors
This could be good news for investors who are looking to buy residential property in London. It means that there’s a good chance that investors will be able to buy property in London for under £500,000 and maximise returns on their investment. However, in Simon Morris’ opinion, investors should do their research and seek independent advice before they opt for this course of action.