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here to see the winners and losers on property values
Sellers - and some agents - are failing to adjust to the new mood in the
housing market. Many advisers have highlighted keen pricing as the key
factor to achieving a sale, yet data just released by Primelocation.com
indicates that the average asking price of better homes in London is now 3.1
per cent higher than a month ago. The Rightmove house price index, due to be
published next week, will show that asking prices in the mainstream market
have risen again.
Is this optimism misplaced? It seems so. The Royal Institution of Chartered
Surveyors this week said that market conditions are at their weakest since
1996, with more agents reporting price falls and a greater number of homes
languishing on their books. The Nationwide house price index shows prices
have fallen for the fourth month in a row, down 0.5 per cent.
Such gloomy news does little to boost the prospects of a home that may have
been languishing, overpriced, on the market for months. Yet some sellers are
achieving prices equal to those seen at the height of the boom. How? By
pricing low, to attract interest, reeling in buyers, and encouraging them to
compete. Tim Blenkin, of Blenkin and Co in York, says: “If you can get two
or three buyers interested, they will give each other confidence and bid the
price up.”
Better yet, a speedy sale will give less time for worries to emerge and
scupper the deal - or for buyers to discover that their lender is no longer
inclined to be so generous. This shortage of credit is the other
hard-to-accept factor defining the property market in 2008.
WHAT THE AGENTS SAY:
"There's some mixed messages out there but we are still predicting a
modest amount of growth as buyers come into the London market." ROBERT
BARTLETT, CHESTERTONS
"The market is like a seesaw that is unsure which way to go."
CHRISTOPHER BLETSOE, H BLETSOE & SON, KETTERING, NORTHAMPTONSHIRE
"We are going back to the more traditional market: owner-occupiers will
buy off-plan, but no more than six months before completion." GUY
ACKERNLEY, PARTNER, KING STURGE, LEEDS
"With local prices settling some 10 per cent below the highs of July
2007, a good number of buyers are recognising buy opportunities." ALEX
THOMPSON, WINKWORTH NOTTING HILL, WEST LONDON
"McHugh & Co recently had a fantastic auction, as did Strettons and
Savills. You can't even get in the room." MARCUS JAYS, PROPERTY TRADER,
LONDON
"Many applicants who would have qualified for a mortgage last year either
no longer do so or are having to lower their sights on price." STEPHEN
WHITLEY, R WHITLEY & CO, WEST DRAYTON, MIDDLESEX
"The market in Cheshire is littered with houses that buyers feel to be
overpriced. The next three months will see those serious sellers becoming
more realistic on their guide prices." RUPERT SWEETING, KNIGHT FRANK
"Well-presented homes in good locations in Bath are still selling well,
with demand greater than supply, but properties in poor condition or
secondary locations are struggling to find serious interest." ANDREW
CRONAN, SAVILLS
"If you price competitively, interestingly and even cheaply, you will
sell. If you make £100,000 less on your home, knock £110,000 off the one you
are going to buy. If people didn't have a hidebound idea about what “their”
house is worth, they could end up quids in." TIM BLENKIN, BLENKIN &
CO, YORK
"Last year we failed to find a buyer for Farriers Hall, Sissinghurst, in
Kent, with a guide price of £1 million. This year we lowered the price to
£895,000. The result was a mass of viewers, multiple viewings, competitive
bidding and a sale price of, you guessed it, close to £1million."
WILLIAM PEPPITT, SAVILLS
"We took a strong line on bringing prices down on many properties by up
to 10 per cent and this caused a market increase in viewings, offers and
sales." DAVID McKILLOP, McKILLOP & GREGORY, SALISBURY
"It's going to be a tough 2008, but ironically it's a good year in which
to trade up." MILES SHIPSIDE, RIGHTMOVE
"There's been a marked improvement since January. The base rate coming
down has give confidence. We are seeing first-time buyers, and individuals
who viewed properties two months ago come back and make an offer" TONY
FILICE, KELVIN FRANCIS, CARDIFF
"Most of the activity in the market is for properties under £500,000,
with first and second-time buyers looking to upgrade. Families with larger
houses are choosing to stay put until there is more stability and confidence
in the market" ALEX INSKIP, KINLEIGH FOLKARD & HAYWARD, WIMBLEDON
"Many first-time buyers are unable to secure high loan-to-value ratio
mortgages, which has unsettled the lower end of the market." PAUL
KNIGHT, STREET, SOMERSET
"Desirable property in prime suburban or village locations is receiving
great interest: a rectory or manor house with acreage is still in demand.
But modern “executive” homes priced from £400,000 to £600,000 are slow
because anything less than exceptional in price or locality is struggling to
generate interest" ROBERT GODFREY, BIDWELLS, NORTHAMPTON
"First-time buyers do stand to benefit from the market slowdown but they
won't benefit overnight. They are being punished for the banks' reckless
lending in the past and should now save furiously and keep their credit file
as clean as possible" PAUL HOLMES, FIRSTRUNG.COM
"The lettings market is carrying on apace and doing nicely, particularly
for nicely presented, good-quality apartments in city centres or two or
three-bedroom houses in the North. The ones that are suffering are older
apartments that look tired and have high service charges" ROBERT
JORDAN, JORDANS, MANCHESTER
"Some buyers are making offers on more than one property through
different agents at the same time and seeing who will take their offer"
JOHN FROST, FROST PARTNERSHIP, SLOUGH
"Buyer inquiries, property viewings and general inquiries relating to
property purchases remain at a good level, although agreed sales as a result
of this general activity are not forthcoming" STEPHEN JEFFERY, JEFFERY
JONES PARTNERSHIP, DERBY
Clint. You fail to mention, as so many other "look how clever I am" brigade do, that the 12K you are paying in rent is going into someone elses pocket and not paying off your mortgage. In addition more moving costs if your landlord decides to sell before youre ready, uncertainty of what the landlord may or may not do with the house in the future. As the market toughens the base rate will undoubtably lower giving you less interest per year. You have to pay tax on your interest earned but not on your principal residence, the list goes on. As for Southeners being cleaverer than the rest of us?? I doubt it.
The time to pat yourself on the back is when you have gone through the whole process and are back on the ladder having made a profit. Its not impossible but a very risky game to play.
Anthony, Manchester,
Maureen Stephen, York. I can only assume that the cash rich Yorkshire folk that you deal with are less bright than us in the south. I sold up for 500k last year and currently rent for 12k pa. The interest on my cash (after tax) is about 18-20k. I'm therefore 8k up on the deal at the moment. If I bought at present I risk losing 50k pa on my investment for the next 3 or 4 years - and from there, who knows? A no brainer as far as I'm concerned!
Clint, Brighton, UK
Maureen Stephen, York, UK. I'm sure that you are right, up to a point. My recent (rental) neighbours for example had sold up last year for a tidy sum and were the idea l cash buyer. They did buy again, but are now regretting it - they realise that had they hung on in rented for a year or two they might easily have saved a couple of hundred thousand - a tidy additional retirement nest egg. Cash rich doesn't mean stupid in a collapsing market. Furthermore, the cash rich renters who sold up at the peak of the boom are, obviously, finite in number so cannot provide more than a limited reprieve for the dying property market.
Clive, Chichester, UK
Clive is wrong to dismiss (a) the cash rich buyer, I work in the industry and there are more cash and non-dependant buyers around than before. Many downsizers sold large homes many months ago and went into rented, and now are out hunting for bargains knowing that they have the upper hand.
Maureen,York
Maureen Stephen, York, UK
Entirely true Clive, the market is crashing and vendors and estate agents need to face up to this and be honest!
The number of Estate agents which have recently shut up shop is a very persuasive indication of the current market.
Chris, Plymouth,
Funny, mortgage approvals are down by 40% which means that: (a) there are lots of cash rich buyers; or (b) you've wasted valuable trees printing a load of made up rubbish from estate agents desperate to talk the market up. I know which option I would bet on (clue, it isn't a)!
Clive, Chichester, UK