The property market has ground to a halt in some areas and many sellers are having to slash prices by 20 per cent to drum up interest in their homes, a survey of estate agents conducted by The Sunday Telegraph.
Runaway house prices, five mortgage rate rises in a matter of months, the introduction of home information packs and a crisis of confidence triggered by Northern Rock are forcing property sellers to slash prices by up to 20 per cent – just to get a sniff of interest from prospective buyers.
Last week two of Britain’s biggest lenders, Halifax and Nationwide, admitted that the market was slowing, but they still painted a reasonably rosy picture, saying that values were 10 per cent higher than a year ago. But their conclusions are at stark odds with findings by The Telegraph, which contacted estate agents the length and breadth of Britain. Agents in Leeds, Birmingham and Nottingham report a market that has ground to a halt – where property is proving almost impossible to shift, even with substantial price cuts.
Sarah Nixon of Hammond Harwood, a Nottingham-based agency, says none of the city’s agents could remember a time when so few sales were going through.
“It’s frightening,” she says. “We have properties which have been on the books for months and months, which have suffered price reduction after price reduction but are still not selling.”
Nixon says September is usually one of the busiest months but was “completely dead”.
“Even buy-to-let has gone stale, in a normally buoyant students’ market. The returns mean that as an investment buy-to-let simply isn’t feasible any more.”
Leigh Bradnick of Englands in the Harborne area of Birmingham says he has a large stock of unsold property which has been on the market for more than six months. “Owners are having to be very realistic about what their properties are really worth.”
Paul Wilson of Dacre, Son & Hartley describes the market in Leeds and much of Yorkshire as “very, very hard”.
“Price cuts have been substantial, up to 10 per cent,” he says. “Many vendors do understand what is going on, and if they want to sell, they have to cut their price. Unfortunately this isn’t working either.”
According to Halifax, prices fell by 0.6 per cent in September, while Nationwide said they increased by 0.7 per cent. Over the past three months Halifax found that prices fell by 2 per cent in the North and by 3 per cent in Northern Ireland but were elsewhere stagnant except in Wales and the East Midlands, where they rose by 1 per cent, and in the South East and Greater London, where they climbed by around 2 per cent.
Nationwide’s quarterly report was rosier. It found prices in Northern Ireland up by nearly 4 per cent and in the North by nearly 1 per cent.
It put the London market 3.4 per cent higher and the “inner South East” 2.5 per cent up. But estate agents quizzed by The Sunday Telegraph argue that these figures are “three months out of date” and do not reflect the current crisis on the high street.
Fraser Hill of Jordan Fishwick in Didsbury, Manchester says his normally buoyant locality has “slowed a lot” and prices are “levelling down”. Buyers in wealthier areas tend to be less sensitive to interest rate movements, and prices in towns such as Winchester, Tunbridge Wells, Sevenoaks, Harrogate and Sheringham in Norfolk appear to be holding their own, agents say – although even here activity has slowed over the past week.
But Martin Ellis, Halifax’s chief economist, warns that the South will be hit soon. “I think prices will continue to slow, but we will see that slowdown reaching the South.” Our survey shows signs of this already. Maidstone, Norwich, Bristol, Southampton and Devon are all experiencing sharply deteriorating markets and falling values.
Alan Emery of Ocean estate agents in Bristol says the Nationwide and Halifax housing data lagged and was not a true reflection of what was happening on the ground. “This time last year we had 80 properties to sell and now we have 240. There are too many houses and not enough buyers,” he says. “We are having to reduce prices. A house that might have sold at £290,000 last year will be put on the market this year at £250,000 and still struggle to sell.”
Mike Evans of Ibbett Mosely, which has branches throughout Kent, says Maidstone is “very, very difficult” and sellers are struggling. “Even where deals are being done, we’ve had several buyers pull out at the last moment, because they have become afraid of higher repayments or that prices might fall and they are paying too much,” says Evans. “In the worst affected parts, the only properties coming onto the market are ‘must sells’, as in probate or company relocation, where vendors tend to be more realistic about price. People are not putting houses on the market just to test it. Hips have killed that activity.”
This picture is being replicated in Hampshire, where towns such as Southampton and Andover are suffering price reductions, according to Richard Neeson, a partner at Dreweatt Neate. “Buyers in Southampton and Andover are now very price sensitive. Values have already fallen by 3 per cent in these areas, and there could be worse to come,” he says. “New developments such as Ocean Village in Southampton have been particularly hard hit.”
The Tunbridge Wells market is yet to see a significant downturn, although Matthew Peacock of Brooks Peacock is far from complacent. “I don’t for one minute think we are recession-proof, and certainly confidence has taken a knock. But buyers in our area are looking for good schools and quality properties. They don’t usually need massive mortgages.”
The Devon market is still moving, provided that sellers are realistic and cut their price when necessary. Jason Hooper of Fulfords, which has offices in the county’s major centres, said the prices at which properties actually changed hands in September were 12 per cent lower than the asking prices.
Norwich is also struggling, according to Peter Sargeant of Brown & Co, which has offices all over the region. “The local newspaper has a property section of about 120 pages each week, but they are mainly recycled houses that have been on the market for months and not sold.”
In an attempt to get the market moving, some agents have signs in the window advertising a “property sale”. Brighton remains reasonably buoyant, according to Fox & Sons, but the agency admits that it is running a price reduction campaign this weekend across all its offices in Sussex. The picture appears to be mixed in London, where the slowdown is likely to hit last, if at all.
A spokesman for Stapleton Long in West Norwood says confidence in the market has disappeared and the area is experiencing “the worst slowdown” for 11 years.
James Lawlor of Lawlor Property in Loughton describes August as extraordinarily quiet, and the September pick-up as “very, very cautious”. He says vendors had to accept 10 per cent less than they were expecting, but if they were realistic their properties still sold. Nationwide says that only Wales experienced house price falls in September and that prices rose in the remainder of Britain, albeit slowly.
The reality is that many properties on the market today are being valued at considerably less than they were a year ago. “We are at the end of the house price boom,” says Diana Choyleva of Lombard Street Research, the forecaster. “Prices could grind to a halt, and falls are likely.”