There’s been a lot of recent noise about the risks of overpricing in the current housing market. But what evidence is there of the impact it actually has? Do homes take longer to sell if they’re priced too high initially, even if subsequent price reductions take place? And is the resulting price achieved actually lower than homes marketed according to prevailing market conditions from the start?

Our analysis of Savills sales highlights that pricing correctly from the offset not only leads to less time on the market but also a greater prospect of achieving true market value. A win-win all round.

Properties that achieve above their initial guide price typically take -25% less time before an offer is accepted, compared to average time on the market. But those that achieve less than 80% of the initial asking price spend almost double the average time on the market.

Pricing high doesn’t just make buyers more cautious from the start, it can also taint a property during its marketing period, even if the asking price is reduced later down the line.

In this regard, whole market data from TwentyCi reveals that a period of increased price cuts (such as after last year’s mini-budget) is soon followed by a rise in agreed sales as buyer and seller expectations become more aligned and activity is facilitated by lower prices.

For example, in December of last year, there were 40% more price changes across the UK than during a typical pre-pandemic December. At the same time, net agreed sales were -22% below their pre-pandemic average, but in February of this year, they’d recovered to be within -10% of that benchmark, and by March, they were just -1% below.

So, if homes are launched at a high price with no success, the next best thing is to reduce the price to generate competitive bidding.

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_{Read the articles within Prime UK Residential – Autumn/Winter 2023 below}