There are still some property folk in denial, determined to assure us that the property party is still in full swing, but as the Governor of the Bank of England begged in his Mansion House speech earlier in the summer, the punch bowl has now been demonstrably removed! Over the summer break about 30% of homes for sale across the country have had their guide price ‘reviewed’ and the properties have been re-marketed in what experience tells us should be the busiest time for house sales in the year.
Most of the recognised house price indices are now pointing down. The latest Rightmove survey of asking prices out today records asking prices down 1.1% although perhaps the most dependable guide the Land Registry has average prices at £166,798. This is still above the average figure of £155,885 recorded in the summer of last year but remains below the peak reached in January 2008 when the average in England & Wales was £184,674.
The property market always ebbs and flows and when it’s rising estate agents often get ahead of themselves. So it has proved this Spring with average asking prices quoted by sellers creeping up an astonishing £61,000 above the average sale price recorded by the Halifax. Part of this near-record gap reflects the greed of some optimistic sellers but those few buyers who have transacted this year have often been savage – in some cases paying thousands of pounds less than the seller was originally seeking.
Not everyone has been caught out but even some of the usually insulated areas in central London have been affected. Agents John D. Wood whose own index is based on actual sales of houses in Kensington and Holland Park in London fell 21% in the first six months of the year. Other agents were not so quick to react and even then many home owners refused to listen when they were warned. Many agents could see as Easter became a memory that transaction levels, the one matrix that means more to estate agents than actual prices, was falling back. They knew something needed to be done and like any commodity, property is price-sensitive. As sellers finally woke up over the summer prices have been pruned and we have seen some impressive price reductions up and down the land.
1. A tidy little flat in Bayswater in London which originally went on the market at £795,000 now has Bective Leslie Marsh inviting 15% less and they are still encouraging offers to be made on this.
2. In Suffolk my own late mother-in-laws’ house went on the market in April with two agents recommending a guide of £395,000. 45 viewings later and no sale, the guide price was hacked back by 18% at the start of September and a sale has now been agreed close to the new guide price of £325k.
3. In Dick Place in Edinburgh Strutt & Parker have taken 22% off a substantial house that started off at £3.75m.
4. In Maida Vale three quarters of a million pounds or 27% has been taken off the asking price of a good looking family house that was originally seeking £2.75m.
5. Finally, Windmill Lane in Arkley has what is described as “one of Hertfordshire’s most prominent homes”. When it was launched in July the guide price was quoted as being in “Excess of £7m’. Since the parched summer and in the absence of serious interest the guide price is now a whopping 28% lower! Just £4.95m should secure the property.
Out of the 930,000 individual properties currently on the market just 8% sold last month. At this rate you would have just a 34% chance of selling even if you left your property on the market for the next 12 months. One well known agent in central London recently begged on Twitter “If you’re a buyer holding back thinking market will drop don’t run with the herd. Look NOW at some of the new and old stuff and offer low.” His concern is turnover, agents are paid on results and don’t make money just advertising property for sale.
As a buying agent helping people to find and then to buy a new home I’m conscious of the new tools that have come along to help people identify cheap or ‘distressed’ property. Web sites like www.propertysnake gather adverts of properties whose prices have been reduced. Even respectable industry giant Rightmove has a ‘widget’ that will alert you to price reductions as they are posted. Predators are circling, funds are being corralled and glossy brochures are being printed to pounce when a victim is spotted.
8 million people search for homes each month, many are tyre-kickers and some just nosey neighbours but until buyers can afford to buy then they won’t swell the paltry 81,000 who bought last month. There are plenty of homes for them to choose from so perhaps the main problem is that even if they can find the money buyers need to be confident that what they buy today won’t be cheaper tomorrow.