James Waight, of John D Wood estate agents, gave the example of a house in Chelsea, West London, that had an asking price of £5m and was reduced to £4.5m before it went under offer – a drop of £500,000.
He added: “In another case, we had a flat that we reduced from £995,000 to £950,000, but that still didn’t trigger interest, so we reduced it again to £895,000.” Mr Waight said the property then got multiple offers – but only after a 10pc price cut.
Sellers are coming to terms with the fact that higher mortgage rates and the cost of living crisis have massively reduced how much buyers can spend.
Mr Waight said: “We have seen a lot of buyers who have had to completely readjust what they can buy based on what they can borrow.”
He said one customer had received a mortgage offer for £8m, but the lender had recently cut it by 38pc meaning they can only borrow £5m. In another case, a buyer who had an offer for £2m can now only borrow £1.5m.
Just as buying power dwindles, the number of homeowners under pressure to sell quickly is climbing.
Mr Waight said: “There is a big issue in the buy-to-let sector, particularly among accidental landlords, as landlords get hit by higher mortgage rate.”
Buy-to-let investors coming to the end of fixed rate deals must remortgage at rates that are double what they are used to.
David Hill, of Marsh & Parsons estate agents, said: “Some people are definitely struggling. High mortgage rates mean their profits have diminished rapidly.”
Jean Jameson, of Foxtons estate agents, said: “A few more landlords are coming in to pick up the distressed landlord stock. They know that because they are buying from a distressed seller they can knock off 10pc or 20pc.”
But there are also distressed sales across the market. Mr Jameson added: “It’s absolutely across all of our divisions. Maybe not all of them have to sell today, but there are homeowners who can’t afford the mortgage rates, and the cost of living crisis means people are really stretched across everything.”
