No one seems to have told the rich that there is a housing recession. Homes under £300,000 are proving particually hard to sell at present as nervous buyers find it impossible to get the kind of mortgage offers that were being thrust at them last year. But it looks like properties over £3m are selling like hot cakes!
Looking at the statistics, sales of cheaper houses have collapsed. Figures from the Land Registry due out next week are expected to show that the volume of sales across the market has fallen by over 25% but at the lower end this is could be more than 30% year-on-year. Estate agents are under huge pressures as not only has the volume of new property coming onto the market fallen by a third so far this year but the number of properties going under offer has shrunk too.
At the top end of the market there are equally few new properties coming onto the market but those special few are being fought over like the first day of the January sales. One of the most recent examples quoted by the BBC is Duntisbourne House, a gem of a house with lodge and flat and 70 acres in Gloucestershire which has been cleverly marketed by Strutt & Parker with a guide price of £5m. Over 70 people are reported to have viewed the property and a sale north of £8.5m is understood to have been agreed.
At the top end of the market buyers with £5m – £10m to spend on a house aren’t spending all they have and almost certainly aren’t dependant on a traditional mortgage. They are typically worth £30m and are looking at buying a home for the next ten to twenty years. When they see the right thing they are quite prepared to pay over the odds for it because it is a rare oportunity and they may have to wait or compromise if they don’t. Properties like Duntisbourne comes up once or twice a year and as we can see from this example, if 70 people want it, there is going to be competition. These buyers will almost certainly have been advised by the growing band of specialist buying agents who represent the rich and famous and who seek out these kind of homes for their clients.
At the bottom of the market, vendors are still having to come to terms with their home being worth less than it was a year ago. When you couple it with the fact that there are fewer buyers and that those that do exist can no longer get 100% mortgages with sensible arrangment fees you are then left with the expectation that the mortgage valuer will have a more pessimistic view of the proposed purchase and values the house for even less!
The market in this respect is split at around £2m. Above this you have a good chance of not just selling but of getting a good price too. Below this and certainly when you get nearer the national average, I suspect that you have a one-in-three chance of finding a buyer and being able to move. The good news is that traditionally, the spring market is when things pick up and sales take off. Just don’t hold your breath!