Earlier this month in their regular report on asking prices the Rightmove ‘greed gauge’ recorded vendor expectations having risen 0.7% on the previous month and was 1.5% up on September last year. This morning (Wednesday) the Land Registry confirmed that despite estate agent optimism sale prices for the relatively few homes that had actually sold did not match this with average prices falling 0.3% on July and 2.6% lower than August last year. It seems that those selling see the glass as being half full. Those buying consider it to be half empty.
Average asking prices are 3% below their highs in 2008 whereas sale prices according to the Land Registry are now about 12% below their peak reached in England & Wales.
The volume of property sold in June in England & Wales was down 13% on last year with just 55,000 sold. In June 2007 there were 123,381!
Whilst the two samples are not identical the trends from both the Rightmove ‘asking price’ index and the Land Registry ‘sold’ index provide a good guide to the relative health of the housing market. Just as no two areas are the same, these surveys highlight that whilst sellers remain optimistic those who are buying will only do so at what they regard to be a conservative value. The result of this difference of opinion is that the market is seizing up with low sales volumes reflecting that very few buyers and sellers can agree on a mutually uncomfortable price.
Sellers are not listening to their agents. Only those cashing in (like those retiring) actually require a high absolute price for their property. For the vast majority who are trading up or down it’s all relative – it’s about the difference between what you sell for and what you pay. If your own property is worth less than you had hoped then you will find that the one your buying will be equally affected.
Low transaction volumes demonstrate just how few buyers and sellers can agree on prices. You have only a 30% chance of selling if you put your property on the market today and those who are serious must concentrate on ‘the 3 P’s’ – Price, presentation and promotion.
It’s much easier to work out a fair asking price these days thanks to the internet. Ask your agent about the price similar properties have sold for. Ignore asking prices as these are not a guide to value.
If you are serious about selling then promote your wonderful home. It may be uncomfortable but for a short period of time go all out to tell as many people as possible. Make sure you are using the internet where more than 80% of all home buyers start their search. Put up a For Sale board for a couple of weeks to catch those who may be impulse buyers.
Make sure your home looks good when people come to see it. You don’t want buyers discussing the ring around the bath when they leave, you want them to be planning how they would live in it!
This market is very challenging and will remain so well into 2012. Sellers need to wake up and realise that an optimistic guide price just makes you look greedy and unrealistic. Buyers are like butterflies on a winters day – rare and exceptionally difficult to pin down.