Calum Ryan bought his one-bed flat in south west London three years ago but is struggling to sell it – even at a £65,000 loss.
The 39-year-old wants to buy with his partner, who lives in north London, but without cash from a sale, this isn’t going to be possible.
Calum, who works in the civil service, bought the flat mortgage-free for £340,000 in the spring of 2023 – but he’s currently struggling to sell it.
He put it on the market earlier this year. Despite expecting he’d have to take a loss on his original purchase price, his estate agent was “confident” it would sell, he says.
After dozens of viewings, he received an offer for £265,000 – £75,000 less than what he paid originally – but the seller didn’t end up proceeding.
Now, it’s back on the market for £275,000 – and though he’s had lots of viewings, there has been nothing concrete in terms of a sale.
Calum thinks there are multiple reasons.
Firstly, the property, built around 20 years ago, has issues with cladding – something that has come under greater scrutiny because of fire safety concerns in the wake of the Grenfell Tower fire in 2017.
It also has relatively high charges, with Calum’s service costs, ground rent and other fees totalling over £4,000 a year.
Thirdly, the market is saturated with the type of property Calum is trying to sell.
He said the cladding issue is due to be fixed next year, and his estate agent has been able to sell other flats in the building to buyers needing a mortgage.
“But with so many properties on the market for a smaller pool of buyers, people have other options they can go for the one without choosing the flat with cladding or leasehold issues,” he says.
“Without the sale there are no funds to buy another home so it’s holding me and my partner back from buying together.
“I’ve looked at renting the flat out but it wouldn’t give us that lump of cash. At the moment the relationship involves seeing each other mainly on weekends, as it’s such a distance to travel.”
Property market is struggling
Property prices are falling or stagnant depending on which index and timescale you use.
Nationwide’s data shows that prices fell 0.2 per cent in September compared to the previous month, but grew 0.8 per cent in the past year – a fall in real-terms once inflation is factored in.
The number of transactions is also down by 2 per cent compared to a year ago according to government figures, once seasonal and calendar fluctuations are factored in.
“The housing market’s main obstacle is affordability,” said Liam Daly, a senior economist at the Centre for Economics and Business Research (CEBR).
“Stubborn inflation has pushed back expectations of interest rate cuts, keeping mortgage rates elevated and pricing many would-be buyers out of the market or limiting how much lenders will approve.”
Average mortgage rates are hovering at around the 6 per cent mark currently – and although cheaper options are available, they are generally far more expensive than a year ago.
“The number of homes for sale has climbed to a multi-year high, so sellers face more competition for a smaller pool of buyers. That imbalance is weighing on prices, particularly in London and the South, where buyers are most stretched by mortgage costs,” Daly adds.
Richard Donnell, executive director at property portal Zoopla, agrees.
“There are more homes for sale per estate agent than we have seen in a decade. This shows that people want to move home or sell but higher mortgage rates are making buyers more selective and cautious,” he said.
Alex Goldstein, a property consultant based in Yorkshire, says that the high amount of supply means sellers need an agent who is proactive to make their property stand out.
“If you’re going on to the market, you need to fight. Your estate agent needs to be ruthless and aggressive. In the current market, buyers are highly critical and dismissive,” he says.
He also says he hopes that buyer sentiment could improve after this week’s Budget.
The start of Andy Burnham’s premiership was marked with rumours about changes to property taxes and although he has since ruled out mass alterations to stamp duty or council tax out at this Budget, Goldstein says sellers have still been affected.
He explains: “This critical approach from buyers and sellers partly comes from what’s happening with mortgages and interest rates but it’s also what the government is doing – there’s much uncertainty.
“People are waiting to see if they’ll change stamp duty or property taxes. I don’t think they will, but that uncertainty is there.”
Some properties being hit more than others
There are multiple different property markets across the UK – depending on the type of home you own, and where in the country you are.
Experts say that although the market is struggling in lots of ways, there are pockets that are proving more robust.
Goldstein says that the leasehold flat market in London – where Calum is trying to sell – is struggling particularly.
“Leasehold continues to be in the news in negative ways. The service charges in some blocks are stratospheric and in some cases buyers are scared. They won’t go near them in many cases,” he explains.
Data from the UK Land Registry shows that average flat prices are down on their 2022 peak, though Goldstein says that even the flat market can’t be seen as a single block moving in the same way, as some apartments – with smaller service charges and no cladding issues – are proving easier to shift than others.
But Goldstein says in other areas, there are deals to be done.
“There are pockets of the UK that are bucking the trend – the entire property market is not dead.”
Data produced for The i Paper shows in pockets of Scotland and the North West of England, transactions are massively up compared with in previous years.
Government figures released in October, also show prices in the North East of England rising by 3.2 per cent over the past year, and 2.2 per cent in the North West.
Sarah Coles, head of personal finance at AJ Bell, said: “These are more affordable parts of the country where people don’t need to stretch their finances to breaking point to buy a home.”
Don’t expect things to change in the next 12 months
Although some of the uncertainty surrounding tax policy could change at next week’s Budget, experts generally don’t think that the underlying conditions making property sales so tough will change in the coming months.
“With renewed inflation keeping interest rates higher for longer, there is little prospect of a meaningful improvement in mortgage affordability until well into 2027. Until then, sellers should expect a slower market, longer selling times and more pressure to price realistically,” says Daly.
Elliott Culley, a mortgage broker and director at brokerage Switch Mortgage Finance, says he thinks the same.
“Quite frankly I don’t believe buyers like rates starting with a 5 and for many they are waiting to see if rates will start to come down again,” he explains.
“Could that happen? Right now you would say it looks unlikely,” he adds.
But he also points out that things can change at pace in the mortgage market.
“At the start of this year we were expecting the base rate to hit 3 per cent by the end of 2026 [it currently stands at 3.75 per cent]. It just shows how quickly things can change and I think it’s very tricky to predict too far into the future currently,” he says.