Most homes for sale are 15% over-priced

We have ended 2010 with calls from many for the monthly house price barometers to be reformed to try and reflect the differences between Clapham in SW11 and Clapham in north Yorkshire. Housing minister Eric Pickles plans to over-haul the Communities and Local Government house price index but it is hard to see how one can reflect the health of the nations housing market without resorting to sweeping generalisations that will leave someone crying ‘foul’!

Here’s my regular New Year message with a look back at 2010.

1. Sale prices.
As you will see from the table above ( it wasn’t as bad as many including myself had feared. House prices held up with both the Halifax and Land Registry recording average prices of as much as 6.6% higher than the year before. (Not to be confused with December’s close compared to January).

1. Asking prices.
Average asking prices were also 4% higher than 2009 but both expectations in the shape of asking prices and reality for those who were lucky enough to find a buyer were below their respective peaks in 2007/8.

1. Gap between asking and sale prices.
The gap between the average asking price recorded by Rightmove over the year and the average selling price recorded by the Halifax fell slightly to £66,757 well below the peak of £75k reached in June 2009. This is however still well above the long term average of £52k and by this measure suggests that most of the million homes currently for sale are typically overpriced by about 15%.

1. Supply & demand.
The supply of new properties coming onto the market as fallen off of late which will help put a floor under prices as there was an excess of supply during 2010 with volumes up 34% on 2009 to 4,200 per day. With demand suppressed (only up 8% on 2009) with only 2,500 homes actually selling each day it is sales volumes that still give most cause for concern. Four years ago properties were selling at the rate of over 5,300 a day!

1. Transaction volumes.
It doesn’t matter if average selling prices were £1m if only two properties are selling. What estate agents, conveyancers, builders, decorators, removal firms and printers of change of address cards need is volume. Sales volumes across the UK will end 2010 at 890,000 according to HMRC. In 2006 and 2007 there were over 1.6m sold!

1. Chances of selling.
In December 2006 you had a 14% chance of selling your home in the first month you put it on the market. Today that chance has fallen to just 7%! Taking account of how many homes are currently for sale (24% more than last year at 936,000), the number coming onto the market each day, the number currently selling then assuming no change in these rates you have a 48% chance of selling if you leave your house on the market for a year! Down from 58% at the end of 2009.