Average asking prices in the last month have actually risen according to the web site Rightmove.co.uk but can this be right?
Their latest survey of just 94,000 properties added to their site in the last month suggests that whilst the average house is selling for 4.6% less at £174,493 (according to the Land Registry) the average asking price of property being added to Rightmove is down 4.9% over the same period. But they say, in October it has actually risen by 1% to £229,691. ‘Shom mishtake shurly!”
It’s unlikely that Rightmove is a repository of the most over-priced homes in the UK. Web sites like Primelocation for instance have much more expensive property although that’s not to say that their property is necessarily more over valued. What is odd is that the Rightmove spokesman suggests that “a severe shortage of new sellers has led some agents to be willing to overprice before the Christmas holidays”.
There are a number of reasons why this must be wrong. Agents are under huge pressures and are shutting up shop at an unprecedented rate with reports of over 120 branches closing every week now. Agents realise that the two most likely ways of doing any business in this appalling market are to reduce asking prices to attract more buyers and to reduce their fees to try to capture business from rivals. As far as housing transactions are concerned, agents are the meat in the sandwich!
I suspect that this is a case of “lies, damn lies and statistics” and that this is more likely to explain this apparent anomaly. Rightmove confirms that the number of unsold properties recorded on their site has fallen – from 78 to 76 per branch. But if these fewer properties just happen to be bigger homes then they will, by definition, be more expensive and their average will look higher.
My own analysis of what properties are selling for as a percentage of asking price suggests that in fact ‘the average home’ that is selling made just over 91% of it’s original asking price over the summer. Looking at the results of over 150,000 sales from the Land Registry and tracking these back to when they were first advertised on the market gives a much more accurate measure.
Rightmove claims 38 million visits during the last month. Many find it hard to believe that half the population are curious about a house move. Agents and their clients are not looking for tyre-kickers at the moment, they want serious buyers preferable clutching mortgage offers. However, with around 34% of the UK mortgage market between them, the actions of the three biggest nationalised banks HBoS, RBS and Lloyds TSB over the coming few weeks will have a significant impact on how many can actually move. If these institutions follow Northern Rocks approach to repossessions then Rightmove may get a solution to their implied concern that there are too few properties on the market. It’s unlikely to be one welcomed by agents, their clients or indeed the wider economy.