House prices UK: While prices are decreasing, agreed sales are going up
According to the latest asking price index released by property search portal Rightmove this morning, the average price of a new property coming to market has dropped by 1.7 per cent, or in real terms £5,222 over the last month.
Whilst it’s normal to see a cooling at this level in December, this year it seems that sellers are happy to price keenly early to ensure that they find a buyer sooner rather than later.
But far from being a negative development, it seems that this more pragmatic approach is paying off with the numbers of sales agreed up nationally by one per cent compared to same period a year ago, suggesting that strong buyer demand and motivated vendors are very much keeping the market moving in many areas.
According to Rightmove, all regions in the UK have seen a monthly decrease in the price of properties coming to market, but South has seen the most significant downwards movement.
New sellers and their agents are reacting to market forces and lowering their pricing aspirations by more and sooner than usual
The South East, and in particular the desirable leafy commuter belt around London has taken a battering, which perhaps isn’t hugely surprising.
Areas such as the ‘golden triangle’ of Esher, Cobham and Weybridge – a long standing favourite with celebrities and footballers alike, as well as well-heeled city workers – are seeing the market slide to a standstill, having previously enjoyed huge increases in previous years, with the average detached property costing in excess of £700,000.
Indeed, the South East has seen asking prices fall over the last month by 2.1 per cent, which is lower than the average drop of London asking prices which have fallen by 1.7 per cent over the same period.
This compares to the annual national rate is which has only seen a very marginally negative movement of 0.2 per cent for the first time in seven years.
Miles Shipside, Rightmove director commented on the report: “New sellers and their agents are reacting to market forces and lowering their pricing aspirations by more and sooner than usual.
House prices UK: Sellers and estate agents are pricing homes more realistically to ensure a sale
“Stretched buyer affordability and the cooling markets in the South and in upper price brackets have combined with the ongoing political uncertainty to change pricing optimism into pricing realism.”
Miles continued: “Seven years ago price rises started rippling out from the capital into the commuter belt in the South East. That ripple effect has now been reversed, with some of the London market price re-adjustment reverberating out into the commuter belt.
“New sellers of property now coming to market in this region have belatedly lowered their price sights. Higher end former hot-spot towns are now among the biggest annual fallers with Rickmansworth (-7.1 per cent), Esher (-6.4 per cent) and Gerrards Cross (-6.0 per cent) now cold spots following price rises of nearly 40 per cent over the seven preceding years.”
However, in other areas of the country, the property boom continues, as Brian Murphy, Head of Lending for Mortgage Advice Bureau explained: “Whilst the current market in London and the South East may be slower as we’ve seen for much of this year, we know that other regions, such as the Midlands, Wales, Scotland and Yorkshire and the Humber, are still seeing strong buyer demand which is a continuation of the divergent market we’ve seen all year, and certainly suggests that there is still significant buyer confidence around the UK.”
As for the fall in asking prices over the last month, Brian suggests that actually, this isn’t a negative development.
On the contrary, he suggested: “This cooling in vendor expectation coupled with mortgage lenders who are pricing competitively to capture available market share in the lead up to the end of the year means that the current climate may offer a distinct window of opportunity for some buyers.”
But what advice for those who are keen to try to secure a buyer before Christmas and are perhaps finding it tough going? Generally, a property priced correctly will sell in any environment, so if it does mean perhaps realigning expectations in terms of marketing price, it’s important not to do it in a piecemeal fashion.
Richard Freshwater, Director of Cheffins Estate Agents in Cambridge advised: “The key with price reductions is to drop the price by enough to bring in a new set of buyers within a new bracket.
House prices UK: Areas such as Esher, Cobham and Weybridge are seeing the market “slide”
“The mistake often made by sellers is to reduce the price on consecutive occasions which can have a damaging effect and put buyers off. It is much more sensible to significantly reduce to a rounded figure and then bring in higher levels of interest, hopefully to generate competition between buyers.”
What’s also worth bearing in mind is that, in a market where asking prices are reducing it’s easy to panic if you have to sell a property in order to buy your next one.
But if you’re trading up, it’s more than possible that you will end up better off overall, as any reduction you may have to accept on your own property is probably less than the discount you could negotiate on your new home.
Scary as it may sound, in circumstances such as this, it is always worth remembering the old estate agency adage, “You only really make money when you buy, not when you sell.”
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