The property market ebbs and flows depending on wider economic circumstances. Depending on the current state of the economy, the market could be favourable either to buyers or to sellers. Conditions that favour those looking to sell property, such as scarcity of available properties and rising prices, are known as a seller’s market. In this article, we take a deep dive into the definitions and characteristics of a seller’s market.
FAQs
What is a seller’s market?
In property terms, a seller’s market is when there are lots of people looking for homes but there aren’t enough to go around. Essentially, it’s basic economic theory regarding supply and demand, A seller’s market is a situation where there’s too much demand and/or too little supply property-wise in an area.
Is the UK housing market a seller’s market?
The UK has recently seen a period of continuing house price rises, even in the face of sharply rising interest rates. This made UK property a seller’s market, but lately the conditions have shifted to a balanced market. This means that broadly, as of August 2023, conditions favour sellers and buyers in equal measure.
Interest rates have been rising, and asking prices in some parts of the country are coming down. If the current economic conditions continue, the majority of the UK property market could shift to a buyer’s market in the coming years.
How does a seller’s market benefit sellers?
Being in a seller’s market is beneficial to sellers because they can expect their property to achieve a better price than in regular market conditions. Not only should they get a good price, they might also expect several offers from competing potential buyers.
The lack of options on the market means that buyers have to work harder to get their offer accepted. Such buyers may feel pressured to go with their best offer straight away, rather than negotiating. They may even enter into a bidding war if the property is desirable enough.
Accordingly, in a seller’s market, sellers can pick and choose their preferred buyer without feeling under too much pressure.
How do you make the most of a seller’s market?
As a seller, you can make the most of a seller’s market by:
- Waiting for one or several offers to come in.
- Holding out for what you feel is a buyer’s ‘genuine best offer’ – i.e., what they are really willing to pay.
- Waiting for a buyer who will give you the easiest sale. I.e.: a cash buyer who is willing to work to your preferred timetable for exchanging/completing contracts.
How do you make a good offer during a seller’s market?
As a buyer, you can help your offer stand out by:
- Maximising your offered purchase price: The highest offer usually, though not always (see below), wins. However, always remember to remain within your affordability levels and take stamp duty, legal fees, etc. into account.
- Being a cash buyer: If it is within your financial means to buy the property without needing a mortgage, this instantly makes you more appealing to sellers.
- Being flexible on transactional dates: If you’re willing to work to the seller’s timetable, this can be a major plus point in your favour. Conversely, insisting on certain deadlines might be a turnoff.
- Demonstrating your preparedness: Whether you need to finance the purchase with a mortgage or not, it’s best to have your paperwork well hand when making an offer. Either get a mortgage in principle or be sure that you can prove your source of funds for a cash purchase. This shows that you are serious and will be able to manage requests from the mortgage lender/conveyancer/etc quickly and efficiently. Sellers invariably want a quick, easy path to sale. So make sure you let them know you can offer them one.
Do sellers always pick the highest offer?
Property sellers don’t always pick the highest offer they receive, because it may not necessarily be the best offer. They may prefer a slightly lower offer if it’s from a cash buyer, a flexible buyer, or a buyer who they feel will enjoy and look after their home.
That being said, a seller’s top motivator for selling their property is almost always to achieve the best (highest) possible price. Some may want a quick sale, some may want to sell to a nice family rather than a buy-to-let investor, but all of them want to get a good price.
What factors influence a seller’s market?
There are various factors that can influence the property market and lead to it becoming a seller’s market. In simple terms, the property market is a seller’s market when demand is greater than supply. This tends to place the advantage in the seller’s favour.
Circumstances that can lead to a seller’s market include a scarcity of housing on the market, which can happen for a number of reasons. Low interest rates can also drive up demand, creating more competitive conditions for buyers. A seller’s market can also be an unintended consequence when economic stimulus or incentives are introduced, such as the UK’s stamp duty holiday during the pandemic.
If you’re looking to purchase UK property right now, we have plenty more advice to offer. Just check out some of the related guides before as a starting point. And good luck on your search.
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