‘Thanks Donald, thanks Angela and thank you Vladimir for nothing’, many estate agents are no-doubt thinking right now.
Or rather, curses on all three of these global lever-pullers for bringing the UK property market, or at least large chunks of it, to a halt.
None of them, including our Chancellor somewhat ironically, seem to care that the economic brakes they have wittingly and unwittingly applied to our nation’s economy have put off people moving home for some time now – so much so that in many areas and property markets around the UK the May ‘Spring bounce’ was weak or non-existent.
And some agents I have spoken to believe that the property market’s current ‘glacial feel’ is akin to the dark days of the Covid pandemic when home moving ground to a halt.
The strongest indicator of this is that agreed prices are nose-diving…”
The strongest indicator of this is that agreed prices are nose-diving particularly in many middle and upper sections of the market, which for most areas outside London means £500,000 to £800,000.
I have seen this at first hand – a family member who recently sold their deceased parents’ home in a chocolate box and ‘sought after’ Sussex village accepted a £100,000 or 12% reduction compared to their original asking price, which is a big drop compared to the usual 5% average reduction achieved on final agreed sale prices that industry data often quotes.
House prices down nationally
And they are not alone. As readers will be aware from The Neg’s own recent reports on Rightmove data, house prices nationally are down by 0.5% year on year driven largely by a glut of homes for sale on the market and too few buyers.
The biggest problem for agents is that realistic pricing of properties coming to market is now getting painful.”
While this may make some owners nervous that the homes they purchased via a 95% mortgage may have put them into negative equity, the biggest problem for agents is that realistic pricing of properties coming to market is now getting painful, largely because many vendors are not buying into the reality of how much their property is likely to sell for on completion.
Beresfords’ reality check
To make this point, estate agency Beresfords this week released commentary urging prospective clients to accept this renewed reality – i.e. ‘it’s a very aggressively buyers’ market’ – and if they’ve already listed their home for sale too high, to be careful how price reductions are handled or risk marring a property’s reputation via ‘death by a thousand [price] cuts”.
While this sort of advice used to be the realm of fluffy advice pieces in the Sunday supplements by property column writers, many home sellers now face brutal choices if they want to sell their home.
My family member decided it was better to sell for substantially less than they were hoping for instead of waiting another three to six months without offers at the original asking price, and then having to withdraw from the market.
Over-valution
This also means that one of the most contentious topics within estate agency is becoming even more extreme – namely agents who over-value homes to get instructions and then hope they can badger vendors enough to sell for less, something North London estate agent Trevor Abrahmsohn is keen on stamping out.
Anybody can put a high price on a property and upload it to the portals, but that is not the aim for sellers”.
But back to Beresfords, which this week was also critical of estate agencies who over-value, adding that “anybody can put a high price on a property and upload it to the portals, but that is not the aim for sellers”.
It added: “It’s important to ensure that you are working with an agent that is realistic on price with a proven track record of selling similar properties in your local area.”
Is this serious?
Is this one of those regular dips in the sales market that most estate agents are familiar with, or something more serious? I think it is the former but this market may continue longer into this year than many property firms (and vendors) would like as the geopolitical situation continues to roil, the economy to falter and consumer confidence to jitter. Here’s hoping the Straits of Hormuz do open once again soon.