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Monthly Archives:October 2009

Estate Agents no longer the most hated!

I had to check the date when I saw the list of the top three most reviled professions. It must be April 1st because although as expected there were the trendy hate figures in the form of bankers along with the expected traffic wardens, no where could I see estate agents.

In a survey earlier in October by the Co-operative I just assumed that agents would be trying to elbow out journalists and MP’s for the top spot. Call centre staff, footballers and tax men all tried to take on the famous three that have topped these polls all my working life but estate agents seemed to have cleaned up their act and had climbed to number six! Could it be possible that one day people will actually aspire to be an agent?

Seriously, part of the reason for this apparent triumph of PR is that so few people these days actually come across an estate agent. It’s hard to find a time when fewer homes were selling and with less than 2,300 a day its hard to recall a time when few homes were coming onto the market. Top this up with the fact that the housing crash has resulted in around 3,000 fewer agents actually working and the public really are seeing fewer agents!

In fact, this idea is borne out by the numbers of complaints reported to The Property Ombudsman who has just published his latest quarterly report. If you have cause to complain about a breach of the Ombudsman’s’ code – either as a buyer, seller, landlord or a tenant then the Property Ombudsman is where you can go. The Ombudsman received a host of complaints in the last quarter, many he says from other agents alleging dirty tricks!

Luckily, Christopher Hamer’s remit doesn’t cover squabbling agents. He is concerned with complaints by the general public. Looking back at the last four quarters, it’s clear he has had a busy time. Problems with charges for Home Information Packs, an increase in problems with lettings as the rentals market has picked up and the usual spread of people who frankly need saving from themselves!

Over 12,000 people contacted his office for advice over the past year. Of these, 911 went on to make a formal complaint to him on either a sales or lettings issue. Over this period he found in favour of 359 sales complainants and 281 lettings complainants. In 346 cases he found in favour of the agent.

All these, in particular the 640 who were let down by their agent are to be regretted but some context might be helpful. When compared to the number of houses offered for sale in the year to September the number of complaints upheld against sales agents represents just 0.04% of the total. Indeed, the number of enquiries made for either sales or lettings over the year represented just 1% of all the homes offered for sale. If you remember that buyers and tenants as well as sellers and landlords can seek redress via the Ombudsman the total number shrinks to around 0.001% of all those who come into contact with an agent.

I’m sure that when the market returns that agents will once again regain their position in the publics’ esteem but for now the official figures suggest that they have at least started to put their house in order.

The Myth of Sisyphus

To all the awards committees out there. I can’t help but think that there should be an mention somewhere in the unnecessary volume of estate agency awards for the man or firm who have tried so very hard against all the odds.

Having not enough to do and with the power of Google at my fingertips I have looked into The Myth of Sisyphus who you will already know from your classical education was charged by the Gods to ceaselessly roll a rock to the top of a hill only for it to roll down again so that he could start the exercise once more. The Gods had thought, with some reason that there is no more dreadful punishment than futile and hopeless labour. Something that many agents will recognise from the property market this past year!

Against this background I wonder if I might nominate Mr Mike Ockenden to be the first recipient of such an award. A man who, in the spirit of Christmas, must be recognised to be a worthy contender regardless of ones own views on his cause. Mike appears to have been ambushed by a complete canteen, being knifed by friend and foe alike. Just as he managed to get one particular part of the Home Information Pack lobby squared away, he has been let down – as likely by his own side as by the estate agency industry who finally woke up to what was being proposed.

In what many expect to be the final year of HiPs, having loyally served eight ministers (and mistresses!) and having stoutly defended the continued u-turns that were delivered ,often unsuspectedly upon his cause, I submit that Mike and his various PR advisors have truly laboured in the spirit of Sisyphus and as such, should be recognised by the property industry during this season of goodwill.

New rules on Mortgage lending

New rules on mortgage lending to be announced on Monday could deal a fatal blow to the fragile housing market.

With tighter lending guidelines, the Financial Services Authority are expected to give banks the moral responsibility of saving borrowers from themselves and check that customers can afford the loans that they apply for.

Whilst there are certainly some individuals who obviously need saving from themselves, most hard pressed home buyers already finds it hard enough to get credit and needs these nanny-state controls like a dose of dry rot!

In the dying months of the current administration, this Government seems determined to loose the support of home owners. At the peak of the market in July 2007 there were over 12,000 different residential mortgage products available and this sank to around 1,200 earlier this year. The Council of Mortgage Lenders states that borrowers are typically having to find 25% deposits and additional restrictions will only reduce the present trickle of buyers capable of completing a purchase. Removing any of the rare buyers that can actually participate in the market at present would obviously reduce demand and could trigger a collapse in prices.

Although house prices have recovered some of the ground they have lost over the past year they are still about 15% down on the peak. Having given banks a heap of tax payers’ cash with instructions to ‘get lending again’ the Government now appears to want to restrict them from actually doing so. Additional lending is the one thing that almost all commentators think will help volumes of sales return. Currently, the number of homes coming onto the market and the number actually selling is running at about 60% below their peak. In August, the number of homes selling every day in the UK was just 2,387. The long term average is 3,745 and in 2007 there were over 5,300 selling every single day.

House prices are back to pre-crash levels?

According to the Nationwide house prices are back where they were 12 months ago and the Halifax pretty much agrees. So, if you have ridden the storm and held your nerve, there is nothing to worry about, it’s business as usual – or so they say.

Hands up who thought that they meant that prices were back to their pre-crash levels? Judging by my e-post bag over the past ten days quite a lot of people do and wouldn’t that be just great? Sadly I’m not sure that it is.

The Land Registry, arguably a broader index and one that is based upon actual sales and not just mortgage offers has prices still more than 10% below their level twelve months ago. They recorded the peak of the market, when prices were at their highest nationally as January 2008 at £184,674. Average prices across England & Wales are currently 15% below this.

Interestingly though, both the Halifax and Nationwide recorded the peak a little earlier perhaps illustrating the time lag between the various indices. The Halifax saw average prices top out in August 2007 at £201,000. Prices today by their own measurement are 18% below their peak. 

Estate agents and sellers took a little longer to appreciate that the band were playing the last waltz. Asking prices, recorded by Rightmove.co.uk hit the top six months after the lenders recorded their peak and three months after the Land Registry. In April 2008 average asking prices were £242,000, that’s just 7% above where they are today. The unanswered question though is what is the gap between the asking price and sale price of the properties that are actually selling?

This last figure remains of critical importance because the average asking price is taken from the 675,000 properties that are on the market across the UK. Rightmove tells us that this figure was £223k. The problem is that in August only 75,000 homes actually sold. The average price that these 75k sold for was about £160k according to the lenders. Did they really sell for 28% less than they were asking?

Nobody officially publishes the asking price for properties that sell. Nor does anyone inform us what the average discount that those who do buy actually get but looking at the figures I see from across the market it looks like the gap is much narrower. In July, I calculate that the typical buyer paid about 16% below the asking price. It’s too early to know about August and September but what seems likely is that the deals being done in London and the South East are distorting the figures nationally. Demand in these areas is still relatively high and buyers still have resources to pay to get one of the few properties that is for sale. The indices may say that house prices are back up but only 10% of homes on the market found a buyer in August. Those that sold in the south seem to have sold well but the majority didn’t sell at all and there is no index of the price of unsold houses – perhaps because for many it would be too painful to read.