Buyers are being tempted back to the property market by the biggest discounts on house prices in four years.
Homes are being sold for 4.2pc, or £12,125, below the asking price on average, according to property website Zoopla.
In September, discounts reached their highest level since March 2019 following a recent jump in mortgage rates.
The number of buyers rebounded by 12pc in September, but Zoopla said they still retain the upper hand as they refuse to compromise on price.
It remains a buyer’s market, with 80pc more homes available for sale than in September 2021.
The biggest reductions on asking prices are being achieved in London and the South East, at 4.8pc – while in the rest of the UK the rate is 2.8pc, Zoopla said.
Discounts have been on the rise since the summer and are pushing down house prices, which have slipped by 0.5pc in the past year.
Zoopla said this was the first annual drop since 2012, with prices on track to fall 2 to 3pc this year.
The South East and Eastern regions – of the most expensive parts of the country – have had the biggest decline, at 1.5pc.
Scotland, where house prices are 40pc below average, is faring best, with an annual rise of 1.6pc.
Richard Donnell, executive director of research at Zoopla, said: “The modest fall in prices is not enough to improve affordability to a level that will boost activity.
“Falling mortgage rates are the most likely route to improving housing affordability, and bringing buyers back into the market in the next 12 to 18 months.”
Fixed mortgage rates have been dropping amid falling market expectations for interest rates, which are believed to have peaked.
Lenders have started offering five-year fixed rates below 5pc and Zoopla expects mortgage rates to drop to 4.5pc in the coming months.
The average 2-year fixed mortgage rate is 6.53pc, while the average five-year rate is at 6.03pc, according to financial analyst Moneyfacts.
High mortgage rates mean buyers have 20pc less buying power – but they have not reduced the size of the properties they are looking for, Zoopla said.
Demand remains 33pc lower than a year ago but is in line with 2019, reversing the frenzied market seen during the pandemic.
Even with a 2 to 3pc fall this year, prices will remain 17pc higher than before Covid.
Zoopla said an improved outlook for mortgage rates has helped bring buyers back to the market.
Enquiries to estate agents are up 12pc since the August bank holiday weekend.
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