For those who either didn’t listen when they were told that their home wasn’t worth what they had hoped or who picked an estate agent who told them what they wanted to hear now is the last chance to try and correct their mistake to try to get a sale before Christmas.
Many home owners thought that their property was somehow different from all the others when they put it on the market and they could ask more. Whilst some agents and a lot more lenders were still in denial at the start of the year it was clear to most that the good times were over. The number of homes that were selling each month fell by 25% at the start of 2008 rising to over 50% fewer by the end of the summer and still we could see examples of properties that were being marketed at crazy prices. Not surprisingly, many are now having to reduce their asking price to attract interest. In a falling market, you have to price ahead of the curve.
There are still over 850,000 individual properties currently for sale in the UK but with less than 7% selling each month there is huge competition to get the few committed buyers that are able to perform. These buyers appreciate that they are in the driving seat which is why many employ a buying agent who can negotiate the very best deal.
Around one in ten properties is now quoting a “revised” guide price with the average reduction being 7%. Better to admit that you got it wrong in the first place and try to communicate that you are serious about selling than continue to ask more than the market can stand. Vendors who persist in asking too much just look foolish and unlike the good times, when a relaxed seller was prepared to wait and see, these days the stigma of too high a guide price hangs over a sale even though there is nothing necessarily wrong with the home other than an owner who is too ambitious.
Examples of 20%+ price reductions in the last few days include;-
Pit Farm holiday complex in the West Country went on the market in March at £2.5m and the guide was cut yesterday to Excess of £2m.
A family home in Holly Park, Finchley was originally marketed at £1.375m when it went on the market. The summer photo suggest that having tried a higher price and failed that to get things going it has been reduced to £1.1m. But will it be enough?
Asking prices have fallen by about 5% over the year but often sales are being agreed at between 15 and 20% below these guides. Nothing is achieved by being too ambitious and in the age of the internet it’s all too likely that someone somewhere is making a note of your mistake. Websites like Rightmove who produce a monthly asking price survey and PropertySnake monitor asking prices and in some cases price reductions too. If you want to attract one of the very few genuine buyers this side of Christmas then the last thing you want is to look as if you are too greedy when trying to sell . Buyers know that there are already enough serious sellers out there and few are prepared to waste time buffing someone’s ego!
Here’s a longer list of properties that appear to have had significant price reductions from around the country;-
14% (to £7.25m!) http://www.knightfrank.co.uk/SJW080266
14% in Essex http://www.knightfrank.co.uk/CHO080006
20% in Chigwell http://www.savills.co.uk/quickSearchDetail.aspx?ID=202933
16% in Reading http://web.aspasia.net/pls/davist/rv?id=9970
18%in Bath http://www.knightfrank.co.uk/BTH080059
25% off in Belgravia http://www.savills.co.uk/quickSearchDetail.aspx?ID=218645
15% Earls Croome http://www.whitehotproperty.co.uk/07,0,0,0,564045,19572,00.htm
10%Alderley Edge http://www.andrewjnowell.co.uk/properties_details.asp?id=733
17% Stratford-upon-Avon http://www.knightfrank.co.uk/STR070530
The market is very, very tough at present but we need to be accurate about precisely how tough. For many, the housing market is like God – with so little evidence you just have to believe it still exists.
It took the RICS far too long to acknowledge that there was anything wrong with the housing market in the first place but today’s comments on the weakness of the market once again exposes just how out of touch the Royal Institution of Chartered Surveyors really is.
In their latest survey released today they claim that the average number of transactions per surveyor between August and October is at a 30 year low at just 10.9 per agency. However we know that there were around 59,000 sales in the UK in September for example, a figure that is confirmed both by my own work with the Land Registry data and by HM Revenue & Customs and with around 11,500 offices either RICS members are less successful than other agents at selling houses or they can’t add up!
Every month the RICS figures are widely quoted despite two fundamental problems:-
1. The figures quoted are always a percentage of Chartered Surveyors reporting rises or falls but never the actual number of these rises or falls. What kind of metric is this? It’s like asking undertakers if they feel happier or not.
2. I estimate that only around 1% of Chartered Surveyors are actually involved in residential sales. Most are employed in valuation work for lenders (and so presumably are rather bored at present!) or in counting bricks for developers or are letting warehouses outside Reading.
These are professional property people but they aren’t on the front line of residential estate agency. Their views are interesting but it would be wrong for the press or the public to feel that they represented the broader market or that they were somehow scientific. I have tried for years to get the RICS to explain either how many residential members they have or how their survey is conducted but without success. It seems that just having ‘Royal’ in your title has given the impression that one actually knows what one is talking about.
Once again I have the latest data from the Land Registry, this time it’s the actual sales in September. This is the most up to date snap-shot of the the housing market – a record of actual completions just a month ago – not the regular Land Registry report of sales agreed six or more months ago.
September was the first month of home sales following the Chancellor’s change to the Stamp Duty threshold. This was also the month that the wheels came off the banking world with Bradford & Bingley, AIG, Lehman Brothers and HBoS just the tip of the financial iceberg.
So far just 15,601 sales have been recorded in England and Wales down from 101k in September last year and from 115k in September 2006. I expect the total for the month to end up at 51,000.
We expect the current figure of 15,000 to grow as conveyancers get round to filing their returns. This paltry number suggests that the September total will still be significantly lower than last year – by as much as 50%! The housing market is officially on a respirator and the prognosis isn’t good.
HMRC confirm the bad news.
Comparable figures from HM Revenue & Customs produced once a quarter – the latest just last week, confirmed that they recorded just 59,000 sales in the whole of the UK during September. We can therefore be very confident about the real condition of the patient. The Chancellors dithering over whether he could announce the changes to Stamp Duty or not removed any hope there may have been that this alone would be enough to improve things. The succession of financial dominos that then fell starting with Lehmans and ending £34billion later with HBoS and LloydsTSB snuffed out the remaining flicker of life that remained.
Forget what the figures from Halifax and Nationwide are saying. Like the official Land Registry figures released last week for July, these are all out of date. This market is falling faster than a whore’s drawers with many homes now worth over 20% less than they were at the peak of the market. We can expect values for many homes to fall further, perhaps to 2002 levels meaning that for some they will have fallen by 50%. 5.7 million people have bought since then and those who borrowed more than 90% will be in negative equity.
Interest rates to be reduced this week.
Falling interest rates later this week will help those on tracker mortgages maintain their repayments but for others, those on Standard Variable products or worse, those facing remortgaging, the future is bleak. For them the LiBOR rate is more significant than whatever the Bank decide next Thursday and whilst it is at last falling the Bank of England doesn’t control the interbank rate. Banks may be more comfortable about lending to each other at last but all are now hoarding cash, rebuilding their tattered reserves and there is still no appreciable increase in mortgage lending let alone a return to the 2007 volumes that were supposedly promised when the Prime Minister dished out £34 billion of our money.