Sales, fees and prices all down!

We’ve heard talk of ‘green shoots’ and of the return in some quarters of gazumping but however hard they try the optimists seem to be loosing the PR battle. Consumers and the media refuse to buy the story that the housing market is on the turn.

Whilst there are signs in some quarters that life may not be getting any worse, the only justification that things may be getting better is because frankly they can’t get any worse. Once you get down to selling 1 house a week, it’s no wonder that estate agents are all humming the tune “Things can only get better”!

House prices are officially down 25% from the peak according to the Halifax. The number of homes recorded so far as having being sold in May is just over 14,000. Down from 63,000 in May last year and 106,000 in 2007. These 14,000 will increase but experience tells me they are unlikely to more than double suggesting we are on track to see the number of sales in the peak selling month down over 70% from May 2007. Fees that estate agents charge are lower than ever as the supply of new property plumbs new depths and competition for the 118,000 homes that came on the market in May meant that agents had to cut their throats to get the business that in May 2007 was over 100% larger at 250,000.

Fee levels are down, house prices upon which these fees are based are down and the number of homes actually selling is so small you need the Hubble telescope to see them. Not much fun being an agent then. Unless of course you are an architect I guess. New commissions are down by 75% I’m told and painful though it must be to have studied hard to qualify as a professional, some graduate architects are actually considering going into estate agency just to keep some connection with property.

A small part of what I do is to advise people on their search and purchase of a new home. You might think that advice from a buying agent is what every sane person ought to consider in a world dominated by selling agents (not brokers!) however there seems to be no end the number of people who feel that representing themselves is the sensible course of action. Most professionals can’t value a property in this market to within 10% so quite how the layman is supposed to do it beats me. It’s no wonder the surveyors who come round to sign off on the deal that has been done before the bank will advance the funds seem all too often to mark the value down. At least one half of the team who struck the price has no qualifications to know what is fair and reasonable and often the buyer has even fewer!

Last week we exchanged contracts on a pretty little house in Chelsea. Originally put on the market hoping for £1.6m the guide price and reality has tumbled and when at last contracts were exchanged the price was just over £1m. My concern is that my clients may still have paid too much but at least they are in the house they see as being their home for the next five years on terms that were affordable. They made the best of the current market.

Whilst we often talk of house prices from the sellers perspective where increases are good and falls bad, the current trading conditions are good news for just as many people as usual – they just happen to be the buyers who rarely have a collective voice in the way that estate agents and mortgage lenders do.

In a bull market any fool can sell a house and there were many agents who proved the point. Now the market is slightly tougher to endure than season 11 of Big Brother and some buyers look like they are starting to appreciate the merits of evening the odds and hiring their own advisors. You wouldn’t pull your own tooth and few do their own divorce so why would you head off on your spend all of the money the bank will lend you without asking someone what “Caveat Emptor” means?