Falling asking prices do not necessarily mean homeowners are losing money on their properties, with many sellers still sitting on substantial gains accumulated since before the pandemic, according to a property expert.
Andrew Boast (main picture, inset), CEO of SAM Conveyancing, argues that recent headlines around asking price reductions risk giving a misleading impression of the financial position of sellers.
His comments follow Rightmove figures showing average new seller asking prices falling by 2% in August, with larger reductions recorded in parts of London.
Boast says asking-price movements need to be separated from actual losses, particularly where properties were initially marketed above their realistic market value.
‘TRIMMING A HEALTHY CAPITAL GAIN’
He says: “Recent reports highlighting asking price reductions have painted a bleak picture for UK homeowners looking to sell. But looking solely at a slashed asking price fundamentally misunderstands how property transactions work.
“Before declaring that sellers are taking a beating in the current market, we have to look past the superficial asking price and evaluate the complete balance sheet of their ownership.”
Boast argues that owners who negotiated discounts when purchasing their homes or have held properties since before 2020 can potentially absorb reductions without making an overall loss.
“If an owner secured a property at a 5% to 10% discount below market value five or six years ago, an asking price reduction today is simply giving back a fraction of an already substantial capital margin,” he says.
“A seller accepting £10,000 below their initial listing price is rarely in negative territory; in the vast majority of cases, they are merely trimming a very healthy capital gain.”
STAMP DUTY SAVINGS
Boast also points to the Stamp Duty holiday introduced during the pandemic, which temporarily increased the nil-rate threshold in England and Northern Ireland to £500,000.
Qualifying buyers could save as much as £15,000 in Stamp Duty, which Boast argues should form part of the calculation when assessing their overall return when they subsequently sell.
He says: “If a seller saved £15,000 on entry and now reduces their sale price by £10,000 to secure a prompt exchange, their overall net investment position remains positive. You cannot calculate a seller’s true return without factoring in the entry costs they avoided.”
SPECULATIVE OVERPRICING
Boast believes many headline-grabbing reductions are instead the result of properties initially being marketed at ambitious prices.
He says: “Lowering an asking price from £400,000 to £375,000 on a home that was realistically worth £370,000 is not a £25,000 loss; it is simply a return to fair market value.
“Sellers who adjust their expectations to meet genuine buyer affordability are not losing money. They’re simply aligning with reality to get a deal done.”
He adds that sellers with an onward purchase can potentially benefit from weaker market conditions themselves by negotiating a reduction on the property they are buying.
Boast concludes: “Pride in an unachieved asking price pays zero bills. What matters is net equity and transactional mobility.
“If a seller takes a minor reduction on their sale, but leverages that same market hesitation to negotiate an even larger cash discount on their onward purchase, they still come out ahead.”
