More than 40% of house sellers are shaving more than 5% off their original asking prices to achieve a sale, according to Zoopla, in signs rising mortgage rates are dampening activity.
The property website said this proportion, seen in June, is the highest it has recorded since 2018. Around one in six (15%) of sellers are shaving more than 10% off their initial asking price to get a sale over the line, the company added.
With around 70% of sales being made to buyers who are relying on a mortgage, rising rates have delivered a hit to house hunters' purchasing power.
"Our view remains that 5% mortgage rates represent a tipping point, beyond which house prices will post annual price falls with lower sales volumes," Zoopla said.
"The sales momentum over, the first half of 2023 is not going to be maintained into the second half. Higher mortgage rates will hit buying power and squeeze more buyers out of the market, bringing a return to modest quarterly price falls."
Zoopla also said its own data indicates there have been fewer potential buyers in recent weeks than there were a year earlier. The number of new sales being agreed continues to run above the general average in Scotland, the north east of England and London.
"It's the most expensive markets, and those where prices have risen the most in recent years, where future price falls are likely to be concentrated," it said.
The report said the East of England, south west England, the East Midlands and south east of England "are areas where house prices appear that they need to adjust the most".
Last week, the Bank of England base rate jumped from 4.5% to 5%, and Chancellor Jeremy Hunt met with lenders, who agreed to a mortgage charter to support residential mortgage borrowers.
Among the measures, borrowers will be able to switch to an interest-only mortgage for six months, or extend their mortgage term to reduce their monthly payments and switch back to their original term within the first six months, if they choose to.
Both options can be taken without a new affordability check or it affecting their credit score. Lenders have also agreed to a 12-month minimum period before repossessing homes.
One risk to house price growth could be a sudden surge in the supply of homes for sale, however.
There are some signs that supply is starting to grow at an above-average rate, Zoopla said, An increase in supply would boost choice for buyers and give them more room to negotiate, while also driving larger house price falls.
"Modest price falls will resume in the second half of 2023 as the supply of homes increases, giving buyers more choice and room for negotiation on price," Zoopla executive director Richard Donnell said.
"We still expect house prices to be 5% lower over 2023 and there is a very substantial equity buffer to absorb price falls which are likely to be concentrated across southern England.
"Demand for homes remains but those households looking to move home in 2023 need to be very realistic on pricing and get the view of agents on where to pitch their asking price to secure a sale."
By Vicky Shaw, PA Personal Finance Correspondent
