Undeterred by reports of falling house prices, optimistic sellers have pushed their asking prices up this month to the highest level for nearly three years.
Rightmove reported this morning that asking prices for property new to the market now average £238,874. The last time they were higher was in June 2008.
Asking prices are now only marginally (1.5% or £3,626) below their all-time high recorded at their peak in May 2008.
Asking prices for new-to-market property rose 1.3% on April, which itself was 1.7% ahead of March.
However, the blunt truth is that more properties are failing to sell.
According to Rightmove, average unsold properties per branch rose from 74 to 76 in the last month. It is the largest number of properties for sale per branch in May that Rightmove has yet recorded, although the largest ever recorded was 79. The website notes that there are few ‘genuinely proceedable’ buyers.
While there has also been a big (30%) drop-off in new sellers, attributable to the long bank holiday weekends at the end of April, Rightmove believes there has been an even larger fall in new buyers.
Director Miles Shipside said: “The increase in agents’ property stock levels, combined with a reduction in the number of properties coming to market, suggests that the number of buyers has fallen even faster than the number of sellers, and transaction volumes will therefore remain low as we move into the traditional summer slowdown.
“Estate agents usually see their stock turn over more quickly during the spring, but this year’s slower market suggests that stock levels may exceed Rightmove’s previous record of 79 properties per branch over the next few months.”
Rightmove’s asking price of £238,874 compares with the latest ‘actual’ mortgage-agreed prices of Nationwide and Halifax which stand at £165,609 and £160,395 respectively.
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Comments
Mike: wow - where do I start? I will, for once, try to keep it short & sweet. (actually, I TRY pretty much every time, but fail miserably...)
Firstly, I seem to owe you an apology with regard to my comment about your vocality pre your appearance on this site. I stand corrected and more than slightly red-faced to boot. I have often said we share many commonalities. Passion is obviously forefront to both of us.
With regard to your read-only comment - I would not like to see you take such a back seat. Yes, it has been said that we non-Agents shouldn't post here - but not that often... and when it is, it is usually because someone has stepped over the line of decency. Yes - arguments break out; nasty names are typed and we all go crying home to Mummy every now and then - but without the views of those members of the public (whether HPC-related or not...) who feel strongly enough to post, then how do the Agents know what the feeling is out there; what they expect to come up against - and if nothing else they can attempt to reason with these non-Agent militant types. And, if all else fails, they tell them to sod off!
So - you're actually doing them all a favour! ;o)
Keep them coming, Mike. If people don't like it, how about we ask the publishers to set up a little side site dedicated to all things 'crashy', so we can debate with the good sports from BOTH sides of the fences without bothering the stiff shirts?
(I'll bet you they would come over for a sneeky peek...)
One final comment. Bearing in mind this is a forum for estate agents and that some have asked that those of us who are not agents keep our views to ourselves - and, as I have been on my soapbox here a good few times - I will now do my best to retire to a read only position.
@PeeBee
"But, Mike, instead of burying people in the hole, shouldn't we be looking to get everybody out, rather than stamp on the heads of the weakest in the rush to escape? "
But trying to sustain the market (artificially through QE and the BOE supporting banks that are technically bankrupt etc.) is simply throwing more people in the hole.
Let's stop throwing more people in the hole because the only way the thing can work now is if the hole gets dug deeper and deeper. Or to get way from the hole for a second - the only way the current housing market can be sustained is with ever increasing debt fed into the market at the bottom and taken out as equity to retire on by those at the top (simplistic, but you get the general idea).
There is only one way out of the hole (sorry, back there again - it's a handy analogy) and that is to stop digging. Those in the bottom of the hole (with big mortgages in negative equity) will have to stay there and gradually fill the hole in by repaying capital. When the hole is filled in, they can move into another one if they want to take on more debt and move.
Those who fall on hard times through no fault of their own should, of course, be helped. I don't want to see anyone on the streets - but the cost of keeping a few people in their homes through a few years of hard times is a pittance compared to the cost to taxpayers of the current bail out shenanigans and the future cost to everybody of paying back these insane debts.
That old saying, 'when you're in a hole, stop digging' was never more applicable.
As for your comments about 2005/6 etc - I was actually one of the early posters on the infamous House Price Crash site. I started posting there in late 2003 when, in my neck of the woods, house prices were already insane.
As for standing up and arguing in front of people - I've done it countless times now. With my brothers (who've helped their children onto the ladder) and friends and acquaintances - anyone I can tie to chair basically!
When they listen to the real arguments, the wider issues about the economy, the waste of money spent servicing mortgage debt instead of having a good time with it, the long term debt issues for the next generation, the fact we won't be able to afford health care provision for our generation because the current generation are all paying big mortgages (and those below them big rents) etc. etc. - they all tend to agree in the end. But, such is the level of brainwashing undertaken by the property ramping media, the BBC, the property supplements in papers, the Sara Beeny shows, the activities of people like Inside Track, many estate agents (group viewings eh?) etc. etc, etc. - it's as if a whole nation has been brainwashed to think debt is good - more debt is better.
It is, as I have commented many times, as if the whole nation is completely, barking mad.
And, just to wrap this one up, I was banned from HPC some time ago for not following the party line.
Pee Bee - we're teaming up to get you. Just because you're not paranoid and all that...
Since there's probably just us two left on this discussion, there's a fresh thread started today where I think some new posters might appreciate your assistance.
rantnrave: "Or, put differently - house prices are too high."
EXACTLY my point, mate. You say potato, I say potato.
I offered an alternative to Mike's take on matter - you come back simply repeating his.
Now... WHO will echo me, I wonder...
PeeBee - "I agree a thousand percent that this is about affordability. People simply aren't earning enough."
Or, put differently - house prices are too high. Why can't the affordability be achieved through lower prices? Despite how the government, Bank of England, British media and much of the public behave, there isn't actually a law banning house price falls!
Mike: Thanks for the response.
I hear (or is it read...?) what you say with regard to your concerns for the future generations. Whilst I acknowledge what you say, and share the same concerns (me now being an old git Grandad and all that...) - however I note you skipped answering the "...and would you be so 'vocal' about it?" part of my question. Of course, I know the answer. No you wouldn't - the same way that I doubt that you were making noises in 2005, 2006, and 2007 that prices were way unaffordable and undoubtedly unsustainable. This is not a criticism, Mike - it is fact of life. You are a father. You obviously hope to be a Grandfather at some point also (mate - it's brilliant. Pity we couldn't have had him before his Dad - only joking, son, if you are reading this... ;o) ). So naturally you want to protect and to pave the way as best as you can for those that follow. Camelot has let me down badly in this instance. If they knew what dreams I could fulfill with their help, then they wouldn't be so quick to take my balls out each week BEFORE the draw!
I agree a thousand percent that this is about affordability. People simply aren't earning enough. When earnings rise to levels which will allow the wage earners to afford to buy property, then all will be well - won't it?!
You and I are never going to sing from the same hymn book over the 'human needs/rights' issue - so I will simply reconfirm my previous comment that it is, unfortunately, neither and we should be thankful for our good fortune every day - whether the roof over our head is owned, mortgaged or leased. There are MILLIONS who can only dream of this luxury, and while I wouldn't let my dog sleep outdoors, I am painfully aware that there are those who do exactly that night in, night out.
"I don't blame Estate Agents - they are the pawn of the banks in many ways. But they are a nuisance. Their insane 'no sale no fee' business model should be outlawed (literally, by law) in everyone's interest. They just can't stop themselves endlessly ramping the market." Look, Mike - I agree with you that NSNF is a blight on the industry. Agents have to factor in that roughly 30% of their business will never come to fruition and cost them money, thus ramping up the cost to the genuine sellers. But as to ramping up property prices I think you've been sniffing glue on THAT point, mate! Think of it logically: PeeBee & Co go out to value 27 Acacia Avenue. It's 'worth' roughly £150k. So because I charge No Sale No Fee, I 'value' it at £200k to make sure I get instructed - KNOWING THAT THE VENDOR WILL PULL OFF THE MARKET BECAUSE HE/SHE CAN'T GET A BUYER?? That's not a business model - that's Hara Kiri!! Mike - I have VERY strong feelings about Agent fees - don't get me started on that one. I have VERY strong feelings about SOME Agent practices. But don't blame the shopkeeper when Heinz dictate the price of the beans on the shelf, mate. OVERVALUING is a blight on the industry - but for every Agent who does this there are twenty, thirty or more vendors who expect more than even the best of the bunch who overcook their appraisal figures could pluck out of the ether, believe me! In my opinion, Agents who blatantly overvalue solely to win instructions are doing so fraudulently - and should be dealt with accordingly. But enough - I am heading into Hendry territory now... I will simply say that you are VASTLY overblowing the Agent's degree of influence in the whole 'values' argument you put forward.
I agree thqat we are in a mess - not your fault; nor mine; nor the vast majority of the population. However, we are in the hole you describe. But, Mike, instead of burying people in the hole, shouldn't we be looking to get everybody out, rather than stamp on the heads of the weakest in the rush to escape?
Many of those you refer to, Mike, are kids roughly the same age as ours - a little older perhaps. Bought three, four years ago or so. THEY have parents. Would you stand in front of a group of those kids and their parents, argung your point of view?
If yes, then you're a braver - or more foolish - man than I took you for...
Come on SBC! If you hadn't spent £100 on an iGizmo then you'd have no problem saving £30,000 for a deposit. Rents are very affordable right now and even if you can't stretch to that I'm sure you could live with the inlaws, putting away £250 a month for ten years.
Take a leaf out of your parents book - didn't your Mum stay at home and raise you while your Dad worked to pay off the mortgage he had taken out at three times his salary? It's no different today. So what if you need to borrow seven times your salary. Get Mrs BC out to work and go and have a certain operation so you wont be able to have any kids. That way you'll have no trouble paying off 250K for a dingy newbuild with a postage stamp sized garden just a few years into your retirement.
Stop complaining and follow your parents example. They were the generation that nearly fought in World War II don't you know!
Mike, yet another well-illustrated summary of this sorry state of affairs.
I think what saddens me more is the people (in general) simply can't (or don't want to) see the intrinsicly immoral and injustness of it all.
Even those cheerfully ramping (not necessarily on here, just in general) the property market don't realise they're being equally shafted. As will their kids, and their grandkids, ad nauseum.
Of course, the obvious counterargument the HomeOwnerists unleash is either the 'you're just jealous' or 'if you worked hard like what we did...'. Quite how we've come to this is beyond me.
Suffice it to say, I sincerely hope this obessession and speculation fo property will be well and truly kicked into touch by the time my son reaches adulthood.
Another long one - sorry, folks... :o\
Chris. I said that your posts were usually thoughtful and sensible - and your frank and passionate reply to mine attests to that completely. I apologise - in part - for what I said. I picked up on a couple of sentences in both of your posts that I felt I needed to raise comments to. Didn't even get to the second one - unfortunately my fingers got carried away and I flew off in rant mode (not rantnrave mode, you note... ;o) ) and kind of lost track of where I was going with the whole shebang. An unfortunate thing to do on a platform such as this, as then everyone sees the own goals - and I admit I scored quite a spectacular one on re-reading ALL of your posts through again...!
Much of what you actually said made perfect sense on a multitude of levels. You are, of course, absolutely right that taxpayers' money should not be frittered away at the potential expense of health and education. Only a fool would argue that with you - and even I ain't that foolish!
Of course, it is a given that everyone to which rantnrave refers to are taxpayers themselves. rant's idea is, as he readily admits, 'raw' and would need extensive thinking through, however I personally see some mileage in it being looked at as A POSSIBLE. There aren't many others being put forward, after all...
I acknowledge your answer to rant re relocaters, etc. All very well and fine - however reality is a different world as you know to the ideal picture you present. You are advocaing the creation of a new raft of accidental landlords - all hundreds of miles away from their properties and too busy at work to bother with tenant issues. Nightmares in the making, I would argue! Also there would be potentially NO relocation properties (which historically were/are slightly cheaper in order to secure early sales...) hitting the market for potential buyers. They become tenants themselves. The minute that their own tenant defaults on a payment - so do they. They have a void period - they can't pay their own Landlord his/her rent. Accidents waiting to happen - do you agree?
Two old sayings come to mind, Chris: the first - "Needs must." Yes - if it is the ONLY solution, then so be it. A means to an end - albeit a protracted end. Otherwise, look to alternatives, as the second saying "A short term solution to a long-term problem" rings eerily true. We are in this for the long haul, as you rightly say. If a vendor thought he could be a landlord for six, twelve months and then sell, I would agree with you hand over fist. The fact is WE DON'T KNOW. You could be looking at a five year scenario. Ten, even. My bet is that 99% wouldn't even consider it if they thought THAT would be the case...
One thing to consider here. People have been caught buying at what proved to be unsustainable prices. We all accept that. Whilst I certainly don't agree with your comment of "dumb enough" (if they were more savvy, as you suggest they should have been, then by definition this would have all kicked off much earlier; sales throughout 2006 & 2007 would have not happened; more Agencies would have closed - the list goes on...), I would say that there is a distinct differential between those who cannot afford to keep their present homes through genuine hardship or extenuating circumstance who also now find themselves facing negative equity, and those who wish to sell for reasons such as relocation, which in the main is for personal goal or gain.
The latter should neither receive nor expect assistance. Their choice. They bought; they sell. If they want someone to bankroll them - then they better speak to their new employer, not the Government. Or be prepared to finance any 'loss' out of their shiny new paypackets...
The answer is, there is no miracle cure currently available. Or not a workable one, at least. Whether one can be created is to be seen.
Much of it is down to personal status and timing. Take me for example. Bought Chateau PeeBee in 1994. Have I 'lost' money on my property over the last three/four years? No is the simple answer, as I have no wish to sell it, and I bought it seventeen years ago at var nigh a third of its' current 'worth'. If I DID sell now, then I would buy as well, therefore I would take advantage of lower purchase prices than I would have paid at the height of the market. I could even be slightly better off, in reality.
So, I COULD offer a 'bargain' if I were selling my property - as long as there was one to have at the other end.
WOULD I accept lower prices across the board in order to allow FTBs to return to buying? is the more dominant question. The answer - yes - for the same reason as above (not to mention the personal 'gain' of having my own two sons able to buy their own properties...).
But for the MILLIONS who are not in my position, and bought on or near the crest of a wave, then this is impossible and it is THEM that will shape the market for years to come.
These are the ones who the HPC movement (in general - I ain't pointing the finger at our welcome resident HPCers rant & Sibley's...) would wish doom and gloom upon - and so far, only rant has offered anything like a sweetener for the bitter pill HPC intend to force down these people's throats.
So - apologies once more, Chris, for taking you somewhat out of context - although I still think that your choice of phrase was inappropriate. I appreciate where you were coming from - HOWEVER, Agents and those who actively promote buying property to others also have to accept that by offering properties for sale, they are seeking buyers for them - and by asking a price, you are suggesting how much to pay for it. Whilst NO-ONE can MAKE a buyer buy - they make their own decisions, after all - I would respectfully suggest that to state, after the event, that the buyer had made a foolish decision is, choosing my words better than before, 'unwarranted'...
Yours, PeeBee (scorer of the occasional own goal... ;o| )
@PeeBee
Well, yes, if my sons were 5 to 10 years older and had managed to get on to the property ladder - I would still be concerned - for their kids and everyone else's.
And the bigger picture - society and economy wise - is far more important.
A highly priced property market where people have to spend lots of their income on paying interest to banks is just stupid. Too stupid for words in fact. We'd ALL be a lot better off if people spent less on mortgage interest and more on other things - creating demand and jobs and, the most important element in a fiat economy - money velocity.
Surely this is self evident? People are struggling now to pay rising bills - and that's with historically low interest rates. Heaven knows what's going to happen when interest rates return to historical norms.
Surely housing is a basic human right - it is certainly a basic human need. Why should society be structured so that one group own houses and others rent them?
I recently rented for about 8 years and, as far as I am concerned, it is no way to live. Your lads may be happy enough at the moment - but what when they get kicked out of their home a year before a child is due to start school and they can't find another property they can afford that is within catchment?
I used to build houses for a living. About 48 man weeks of labour and a load of bricks, timber, plasterboard and roof tiles. Why on earth we all have to go into debt for half our lives just to buy one of these baffles me. Apart, of course, from the fact it means the lenders can live the life of Riley while the borrowers slave away to pay the interest. Of course some people peddle the land shortage myth - but only 8% of the UK is built on so far - including roads, railways, industrial and residential development.
I don't blame Estate Agents - they are the pawn of the banks in many ways. But they are a nuisance. Their insane 'no sale no fee' business model should be outlawed (literally, by law) in everyone's interest. They just can't stop themselves endlessly ramping the market.
Even now, with the sheer, awful mess we are in - borrowing 150 thousand million pounds a year just to stand still (your sons and mine will be paying that back, with interest, ALL their lives), paying £120 million a DAY in debt interest payments, all most agents want is for THE BANKS TO START LENDING AGAIN. Damn those pesky banks.
As I said, it makes me want to weep. Life would be so much easier for everyone if bank lending into the property market was properly regulated.
We're in a mess. When you're in a hole you need to stop digging. People at the bottom of the hole are going to be hurt as the hole gets filled in a bit. But that's better than the alternative - which is a whole generation in the bottom of a hole they'll never climb out of.
Chris - let's catch up over a drink or two in five years then! Your place or mine?
If I recall, house prices continued falling in the mid 90s for several years after the economy had returned to positive growth. The link between increasing GDP and increasing house prices isn't so direct (I'd actually say that as house prices go down, people spend less of their disposable income on mortgage and rent so have more money left to spend in the economy, thus boosting GDP).
Besides which, data out today suggests consumer confidence is now hovering above all time lows. The UK economy isn't motoring ahead at the moment, that's for sure.
Right, that's enough doom and gloom from me for so early in the morning!
@Rant
You said: (How would helping someone in n'equity improve our society? Erm... it might help someone who through no fault of their own has lost their job relocate to take another one elsewhere. This then gets them of the dole. Surely the merits of that are hard to argue against?)
I have already offererd the solution to this problem that requires no taxes. The person offers up his/her property to the rental market and then rents something near the new job. He or she is no worse off as long as rental prices are comparable. If they are more expensive and the person is unable to find the difference, the chances are that property values would also be more expensive and would not have been able to buy in that area in the first place, negative equity or not.
As it happens, I heard today that some banks are allowing home owners to roll negative equity onto the loan of a new property so that they are still in negative equity on the new property by the same amount, but I haven't checked it out yet. If this is true, problem solved.
I also heard tonight that unemloyment had fallen significantly this year. If this is true, it could signify the warming up of our economy and the light could indeed be at the end of the tunnel. Even if they pushed interest rates up to 2% this year, this is peanuts compared to what it was and is still bargain borrowing. I just don't see the armageddon that you foresee, but events will unfold whatever we think might happen and we can re-read this post later and decide who was closer to predicting the future! ;-)
I can tell you have a passion for property Chris - you have long halls where as the rest of us have long hauls ; )
How would helping someone in n'equity improve our society? Erm... it might help someone who through no fault of their own has lost their job relocate to take another one elsewhere. This then gets them of the dole. Surely the merits of that are hard to argue against? (knowing this site, someone probably will give it a go though)
Of course none of us has a crystal ball for the future. You've given us your prediction, so naturally I have to bore everyone with mine. I think the banks got their fingers burnt through the silly lending sprees. Anyone expecting them to return to the lending levels in the decade prior to 2007 is going to be disappointed. Lending criteria now, as you point out, is where it was ten years ago - it's reverting to what it was.
That can only mean one direction for house prices boosted by the availability of cheap credit. At 0.5% interest rates, I think it will be a slow grinding down of prices with low transactions for years and a good chunk of the falls being in real rather than nominal terms. Raise interest rates and things will more likely speed up - as was seen in '08 - '09. I reckon there's unfinished falls to come that were started then and the level of interest rates will determine the speed of that fall. Prices will revert to a level that banks can lend at without requiring bailouts. Exactly what that level is remains unknown, as is the timescale it will take to get there. But I believe that is ultimately where prices are heading.
@Rant
I have no problem with people borrowing their way out of negative equity and anyone lending them should put sufficient safeguards in place to recover those debts. If the government choose to do something like this, I would want them to be cautious with tax payers money. The thing about the student loans is that better educated young people go onto improve our society (I.e. more doctors, better businesses, greater private sector companies, which create more jobs etc.) The risk is that many students fail to obtain a degree, can't get decent jobs later or marry staying at home with the kids and these loans are never repaid.
How would bailing out someone with negative equity improve our society?
What I don't fully understand is how these prices are able to fall in the first place? Is there a red button somewhere that the PM pushes and suddenly house prices fall another 30%?
If market forces continue as they are doing, then things will continue as they are. A little drop, a little rise followed by another little drop. In a year or two chances are the economy has picked itself back up and prices will rise strongly again.
Everyone accepts that prices over the long term will be higher than they are today, so buyers will always buy as soon as they get the chance (If it looks like the falls are over), because sooner will normally mean cheaper.
I still think you are lobbying the estate agents to agree with you and we all go "You know what, Rant is right, let's drop all our prices, value lower and we will all be better off in the end!" This really is getting you nowhere.
If there was a golden opportunity to sort out the housing market, don't you think it would have happened already?
I don't accept the idea that if prices were lower, the banks would have money to go further as there is no obvious limit at the moment. They will lend to anyone that is a safe bet and has a decent deposit. They are just being sensible which is what many on HPC were arguing for many years before the crash! Now they are doing it, people are moaning cos they can't get a mortgage. You can't have it both ways. Many people shouldn't have had access to a mortgage in the first!
Last Monday, I paid another £9800 off one of my BTL's which means I now own 58.94% equity across the whole portfolio, so clearly I was a safe bet to lend to and two of my properties were bought near the top of the market! Call me dumb, but I'm in it for the long hall!!!
Chris - would you be opposed to a scheme where the amount of n'equity preventing someone moving was 'loaned' to them by the government and paid back on an inflation-linked only interest rate over a perios of time - much like the student loan scheme.
If (and the following should not be taken as me advocating anything) house prices fell 30% as you suggest tomorrow, banks would not have any more money to lend. However, buyers would then be looking to borrow less - the same pot of funds could be given out in smaller loans to more individuals. This would in turn increase the volume of transactions that many EAs on this site are wishing for right now, would it not?
At the present time, banks are not restricting the number of people that they lend to, but the amount that they lend them.
@Peebee
I didn't say "Dumb people" I said "Sorry, I've said this before, why do I want my taxes spent on paying for people to sell at a loss when they were dumb enough to buy at the wrong time,"
If someone speculates on the stock market, buying lots of stock at the very peak only to lose a fortune the next day, I would also say that he was dumb enough to buy at the wrong time. He made a bad judgment call. If someone buys a property at the very peak of the market loses money when they need to sell the very next year, I would also say that they made a bad judgement call.
Okay, no one can see into the future, but buyers should know that rising prises are not guaranteed and they can go down as well as up, but many never considered this.
Sure, they have lost money if they sell, but it is only a paper loss if they don't sell. If you need to move house for employment, keep your house and rent it out, then rent out someone else’s house near your new job. It then doesn't matter about negative equity. You sell eventually when prices rise again.
What I don't want to see is taxes spent on giving £30 or £40k to someone just because they want to sell and can't because their house has lost value. Tuff, don't sell or take out an unsecured loan to cover your loss, but don't ask for taxes to bail you out. It's not my fault you can't sell, so don't ask for money I have given to the taxman to let you off. Do that and the buyer re-enters the market at today's prices, his debt wiped clean, only to make an instant profit the second prices rise again!
That's what happened with the banks. Bail them out and then they can start paying themselves big bonuses again!
Unfortunately and apparently they were too big to fail, but people in negative equity can't be surely?
Inflation will wipe out this hangover over time. Quantative easing will assist in raising inflation and pressure on salaries will increase making properties affordable again one day.
As you have reiterated, you dumb Magpie ;-), no one has a right to own their own house so Mike's sons (Sorry Rant) will just have to rent until they can afford to buy.
My final point again is that the banks hold the mortgage keys. Lets say for arguments sake that tomorrow all house prices were 30% cheaper! Do you think that the banks would suddenly wake up and say "Hey, lets start lending to the masses again"? They would certainly not. So instead of people banging on about the cost of houses, they should think this problem through and consider it from another angle. That angle is that people wanting to buy a house for their whole life has become saturated by everyone wanting to do the same thing and this has driven property prices to levels that only a small minority of people can afford to do these days. For people unable to aquire earnings that are high enough to put them in that minority bracket, they need to consider rental and be happy with it until things change. Only supply & demand can change things. Supply= the number of available properties & Demand= mortgages, earnings, deposits, unemployment, number of buyers etc. In a free market economy, market forces are always in play and decide the value of things.
I am against state involvement where ever posible. We don't live in a communist country. Perhaps some of the banks should have been allowed to fail. Hopefully a situation like that should never been allowed to happen again.
The current stalemate in much of the housing market seems to fuel these discussions.
When prices were soaring at double digit YoY growth, then the HPC lot could offer little anecdotal evidence to support their points of view. In 2008-9, the speed of falls seemed to suggest a full-on HPC was taking place, briefly silencing those with bullish views about property.
Now, with interest rates slashed to 300 year lows and house prices barely unmoved from 12 months ago, both points of view have strengths and weaknesses. Here's the thing though - there are folk out there who can't understand now the recession is technically over, why house prices aren't continuing their upward trajectory. Equally, there are people who cannot fathom why, given all the obstacles the housing market is facing, prices aren't falling faster. No-one is getting their way or desired outcome, including EAs caught in the middle who need the turnover to put food on their tables!
While this is primarily a response to Mike Wilson, this is actually addressed to quite a few - you'll figure out for yourselves who's who as I bimble along, no doubt... ;o)
Sorry - this looks as if it is going to be another PeeBee novelette!
Mike. You post how you see things - in black and white. Nothing unusual there - 99.99% of the population do it, myself included. There is no shades of grey, no other possible colours with your post. Just two scenarios. EACH bring doom and gloom on someone. Who should lose - and WHY? We know your answer. We know your reasoning. But, Mike - be honest. IF your sons had been born five or ten years earlier, and were already living in homes they had bought while they were relatively affordable, would you still have the same view and would you be so 'vocal' about it? I SHOULD have exactly the same view as you - yet we disagree on so much.
You believe having a roof (...that you own...) over your head is a basic right. Sorry - it is FAR from that. It is a luxury to have a roof over your head - one that I am thankful for every day. My sons also have rooves over their heads. Rented... but still each have a roof. They would dearly love to own - but have accepted with good grace that this is not currently possible. They have joined no protest groups in the hope of levering a change.
You also state "What have the younger generation done that they must suffer debt slavery all their lives for something their parents and grandparents afforded relatively easily." Hmmm - not for the great majority, I would argue. Most of my generation went all out to buy the best property they could on their salaries, on the basis that it would save them moving up later and their salaries would only increase. In the mid-late 80's and early 90s, a 'starter home' was for many a three bed semi or even detached. I sold MANY four-bedders to FTB's who were on decent joint wages. They didn't bat an eyelid about the worries of one being made redundant... or worse - PREGNANCIES!!! Those properties that were at the bottom of the market, price-wise, were there because NO-ONE wanted to buy them other than landlords for housing DSS tenants (who were var nigh the only people who were prepared to live there....). Here 'oop north' you could buy a flat in the West End of Newcastle for less than a grand - and then rent it out for seventy quid a week (after several attempts at fumigation)! I actually made the Red-Tops in 1993, when I sold a repo for the magnificent sum of £800 - and my Fee was £1200+ VAT! Believe me - I wouldn't have sold it to a FTB unless they had no nose and a cast-iron stomach...
Back to the point I started above - sorry I digressed as usual... My first purchase was not a walk in the park, finance-wise. We did it on my wage only, as we planned a family straight away. Every month was pretty much hand-to-mouth. No spare money; no nights out on the town. The next place was a similar stretch of finances. And the next - I remember in the early 90's applying for a liar loan of sorts - my then Boss simply stated an OTE that was OTM (Off The Map) on his employers' reference to the Building Society. We simply managed - as did THOUSANDS of others in the same boat. You may never have been one of those - but I think maybe you were, to some degree or other...
I agree with you that house prices to wages are out of kilter. Surely you must agree that this is much to do with wage starvation as it is rising prices. I am earning now what I earned in 1998 - but at least I am earning, which is sadly more than I can say for thousands in the industry...
Finally, Mike, you state "The first scenario - the one agents want - is so full of doom and gloom that it makes me want to weep" Come on, mate - do you SERIOUSLY believe those words? Agents want business; turnover - MONEY IN BANK. Lower prices would suit Agents down to the ground. However you have fallen into the mould of Blame the Agent. Your responsibility is to do the best for whoever pays you. If that is yourself, which I guess is the case - then you are Master of your own destiny. You can pick and choose who you work for; when and where. Agents have clients - Masters of their destinies - who want the best price for their properties. The Agent's responsibility is to achieve this, as per the EA Act 1979.
Unless you have walked in their moccasins (which I have...), you cannot know the frustrations that Agents have to deal with REGARDLESS of the market conditions applicable at any one point.
They are right to defend their livelihoods, the same way that you would defend yours. They don't necessarily have to agree with what they are trying to achieve - they are providing a service to a paying client. That said, many will endeavour to market properties at 'current' prices - which people are prepared to pay. These, however, are STILL higher than would suit you and yours, rantnrave, Sibley's... - and millions of others including my lads.
And if that is 'the going rate', then no-one is going to advocate dropping below it - are they?
Chris: If you are the usual 'Chris' (Dutch parents) who posted earlier in this stroy thread, I normally find your posts thoughtful and sensible. Sorry - but today you've had a stinker, mate! You've scored more own goals than West Ham leaked all season... (and that's from a Magpies fan!!)
IF a buyer is prepared to pay 'x' for a property, which is then backed up by a lenders' evaluation of its suitability for a loan against it, then how can you possibly say what you did? Without these 'dumb' people, you would have no business - for who knows what the market will pay for a property tomorrow, next year, or whenever. You make an informed decision to set sail based upon the wind direction that day, and the forecast for tomorrow.
Your last two posts seem not to be from an Agent - and appear to have been simply to inflame. Congratulations - job well done. ric was spot on with his words to you.
Sorry, again, for the ramble. There is a TINY bit of sense in there. Somewhere...
Sorry Mike - any use of nooses will reduce the pent-up demand and we can't have that.
@rantnrave
Good point. Sorry, I've sobered up since my last comment - let the 20 x salary mortgages be doshed out at once.
Got a couple of nooses for my kids to get their necks in?
Mike - you've completely failed to mention the most obvious way forward - Innovative Lending Solutions.
We just need the banks to open the floodgates of cheap credit again. Lending to multiples of eight, ten, heck even twenty times salary is what's needed to get the housing market and this country moving again.
On the subject of DOOM and GLOOM.
We from the HPC side of the debate (and I am NOT from that site) are regularly and constantly accused of spreading DOOM and GLOOM.
Hmmm. Which is more doomy and gloomy?
The market stays where it is. A generation is priced out of housing - they either have to rent all their lives (from one Shorthold tenancy to another) or put a massive mortgage millstone around their necks. Mortgages for many entrants to the market over the last 10 years are huge and absorb a big percentage of take home pay - which means those people have less money to spend creating demand and jobs in the economy. In many cases both parents have to work - meaning kids are dropped at nurseries at 6 am and collected at 6 pm. The cost of something as basic as a roof over your head is a major factor in people's finances for most of their lives. Because house prices are so high relative to incomes and banks are now back on planet earth - housing transactions numbers are low and will remain low for a generation. (Wow, does that sound gloomy or what?)
Or ....
We have a sharp house price correction durng which a significant number of people will suffer. At some point houses become affordable again, johny-come-lately, massively leveraged buy to let landlords have hopefully been wiped out and ordinary people can buy their own homes over 25 years with an affordable mortgage.
To me the second scenario is full of optimism and hope. The first scenario - the one agents want - is so full of doom and gloom that it makes me want to weep. What have the younger generation done that they must suffer debt slavery all their lives for something their parents and grandparents afforded relatively easily.
So, call us HPCers anything you like - argue, say we're wrong, but don't call us doom mongers. The situation you want and hope for is incredibly gloomy.
AC - there was a thread of 134 posts last month. Looooong way to go yet to beat that!
Chris - erm, I don't have any kids...
You are aware I assume that your tax money, through the SMI scheme, is already being used to keep people in properties they can no longer afford to live in... Started in 2009 and the period to qualify for this two-year scheme has just been extended to the end of this year.
Your (and my) tax money is also being used to pay very high rates of housing benefit to keep significant numbers of people in property which they could never afford to buy or even rent.
The property bubble you refer to is still with us and is being propped up by tax money. Banks that should have gone under due to their lending frenzy are also being kept afloat by, wait for it, tax money.
Any folk wanting to object to their taxes being used to support the housing market have left it rather late I'm afraid. If you are suggesting that the government should get out of the way and remove all these props supporting the current level of prices, then I agree with you 100%.
Post number 68 - call me TROLL.
Way back at post 5 I wondered if we could beat 64 - the previous record.
Thanks for all your input.
;o)
@Chris - "people who were dumb enough to buy at the wrong time!"
Are you mystic meg or something.....do you think the people are dumb who get knocked over and killed in a freak road accident because they were dumb enough to go out at the wrong time! or a victim of terrorism is dumb for getting on the wrong train and not driving!
Markets change and no one can predict them exactly.......if they could and your therory of only the dumb get caught (not knowing how old you are) I assume your house if worth half of what you owe ;>(
Dont insult a large proportion of the nation by calling them bumb, some uber intelligent people have been caught out.
@Rant
(the misery of wanting to move and being in n'equity through falling prices is a big factor. As I've posted here before though I think the govt should focus on initiatives to help them.)
Sorry, I've said this before, why do I want my taxes spent on paying for people to sell at a loss when they were dumb enough to buy at the wrong time, just so your sons can get onto the housing ladder!
I would rather they used my taxes to save someone's life in hospital, repair the primary school roof and built a few more council houses to house your sons.
Market forces, supply & demand, inflation and such like will correct the house prices to a level many people are happy with and things will continue. Some kids will never get onto the ladder and why should they? If they don't earn enough, can't save enough then they should rent. People don't have some god given right to own a house of their own! They have a right in this country to breath air and that's it. If they are lucky enough to get benefits then they have this right too, but that's it.
Maybe your sons should look at part ownership. They can part rent, part buy and as they earn more, they can buy more of the house they are in, but please stop with the government should do this or that. This nanny state has got to end and people should man up and deal with life as it happens and stop blaming the government.
If agents want to over value property to get it on their books they need to be good at convincing vendors to drop the asking price soon after they get them on their books if the interest levels are not good. No good at this bit then they will soon go under!
Value correctly then you need to be a great estate agent to win the business at a much lower asking price than your competitors and sometimes a cheaper fee helps, so your profit margins could be compromised, but you have a better chance of earning something.
Most agents chase the second hand over-priced stock so they can easily say "The other agent over-valued it and they never stood a chance".
Nothing is going to change though. Valuers are there to win the business and if they get the price right then this is a bonus. There can come a point though where even the vendor doesn't think a valuation is realistic and will dismiss the estate agent as over optimistic/ naive and choose another agent who has shown a better understanding of the market.
As for the short sharp house price correction mentioned earlier, I fail to see how a quick lowering of prices will increase sales numbers if the banks are holding the purse strings this tightly! Nothing will change, whereas if the banks agreed to lend 95% mortgages to ordinary people in ordinary jobs again, transaction levels would increase massively, even at today's prices. If they started giving mortgages away again as they did in 2006 & 2007, the bubble would reinflate overnight!
Hatchet burried.
A side note to Editor: I do wish that a moderator weeded out the non-relevant stuff on EAT. I'm sure there are many who don't have the time to wade through it. Is EAT slowly becoming a chat room?
@Rant - totally agree on the falling prices help bit! arrghh
Did an article in our local in 2008 and re running it this week re: "make money in a falling market"
You can save a fortune if your looking to move up market....so your spot on more vendors need to understand they may be better off with a slide..
hey hoe! we will all get what we want in the end i reckon!
Cheers Pee Bee - I would also consider Wooden Top, along with yourself of course, as having some of the best-prepared points here so would happily see any hatchets burried quickly. OK - 3,2,1... group hug everyone.
Trying to get back on topic (!) - I'll put this out with no malice intended - has the very long run of price increases left the EA industry with fewer staff familiar with falling markets? Overvaluing wasn't an issue when banks were lending to support those prices. Since that has stopped though, any one who has less then ten years' experience is in a different environment. In most industries, a decade of staff turnover would be a considerable amount of people. Just a thought for discussion...
I take that point on board Ric. I'll stick my neck out again though - I don't think many in this country, buyers and/or sellers, realise that falling prices can work to their advantage. Selling at a discount and buying a larger place at a similar discount means borrowing less money! EAs get more sales, banks get less profit etc - what's not to like? In reality, the misery of wanting to move and being in n'equity through falling prices is a big factor. As I've posted here before though I think the govt should focus on initiatives to help them.
rantnrave: Firstly, can I respectfully request that wooden top and your goodself bury whatever hatchet there is. You both post with sense; both offer great debate material - and both contribute to any discussion generally with gentlemanly demeanour (which is more than I can say for many - including myself on occasion...). Without your opposing input, there would be less interest for the masses who read. wooden top is right in many ways - in the same ways he is equally wrong. We all are. We all have opinions - who is to say that our personal opinions are right other than ourselves! There are a number of posters who come on simply to inflame. Some are HPC - some simply get lumped under the heading by default. You are, in many ways, the enemy in the camp here - however I personally believe that your 'being' here (along with Sibley's..., of course...) is good for the site in a number of ways. You and he are, as I have said before, "the less militant HPCers" - yet you have probably more passion for the cause than most. Your willingness to debate the market gives Agents clear insight into what feelings are out there with a proportion of the house buying population, which is also a good thing.
wooden top, along with many of the regular Agents here, are similarly passionate about their industry, and rightly become aggrieved when certain individuals cast doom which could slowly ruin their livelihoods by drip-feed - I call it 'death by a thousand column inches'. It is little wonder that we (although I am not an Agent, I will lump myself in their numbers on this one, as I am employed within the industry, as I have stated) become defensive and bite - unfortunately your head raised above the parapet just at the wrong time, as I think wooden top started to explain before it all kicked off!
If I was a seller, I would want the wooden tops of this world to be MY Agent. Likewise, if I were a buyer, I would want to deal with the same people.
Your view of the reasoning behind price increases is interesting. I would argue there are a myriad of reasons. One would be - if I were being honest - that some Agents are still overhyping prices. Like has been said here, however, even hyped properties sell sometimes - so there is no hard & fast rule unfortunately. One thing IS pretty certain - for every property there is a buyer. How long it takes to find the buyer (or vice-versa...); how much the property sells for, are the unknowns. Without testing the market an Agent cannot hand on heart tell their client that every effort has been made to achieve the best possible price - although this does not mean for every property to be launched at stratospheric levels! wooden top is also very right when he says that sellers are most often buyers and VERY QUICKLY turn from 'Mr Overoptimistic' to 'The HPCer From Hell' as soon as they get the offer on their own and start viewing their next purchase!! This could give a clue as to another possible reason for asking prices increasing. You sell high - you buy low. NOT if you are selling and buying in the same market - which is what most people do when trading roof for roof. Offers generally come in low. The worse the market appears, generally the lower the offers. You have proof here that Mr Rightmove is openly comparing like with unlike. £60k 'differential' - so of course, some folks will try to get exactly THAT off a property. So the vendor hikes up the ante to accommodate - and so it is. An upward spiral - or a downward one waiting to happen? You choose...
Me - I'll stick to the PeeBee & Co theory, if you don't mind.
ps: wooden top - thanks for taking time out to clarify where you were coming from. I WISH I had bad hair days - lost most of it in the HPC of the early 90's... ;o)
For one horrible moment I thought you'd joined the FF-S "roll over and play dead for the nice buyers" brigade...
@Rant, your last sentence does point you back to the fact most sellers are also buyers and their optimistic view on the market may not be a bad thing if spun the right way!
AoS - Nah, this release gets mocked over on HPC as well for not measuring any further discounts to the initial asking price. That fact isn't always clear in the way it is covered by the media or even presented by RM themselves, which just adds confusion to an environment already full of statistics.
Personally, I think it's more useful as an indicator of sentiment, which in this case seems to suggest many vendors still have a lot of optimism about prices increasing.
Peebee - I was thinking along the same lines - Thanks for your well put illustration - hopefully that kept 'a few of them' quiet.
Statistics can read whatever you want them to say. Virtually every press release has been altered to suit.
This is the kind of stuff that HPC gobble up and take as gospel.
Good news doesn't sell.
@rant ..... not relevant to lead story. Silly comment to make about embarras .... I choose not take up everyones time with further irrelevant posting and hiding behind nothing. Everyones seem them in any event, so not necessary to cut and past away all day. I make no further comment.
WT - In every thread here which I post respectful and thought-through comments (one here is asking for clarification of a point, admittedly), someone feels the need to insult it. It's a different person each time and, as with you, I ask them to highlight the errors. They then embarrass themselves by being unable to do so. You aren't the first and alas I'm certain you wont be the last.
It doesn't matter that similar points are made by EAs in the same discussion. No - if they have a HPC background, they must be mocked, ridiculed and insulted. Well, after all, EA offices are overflowing with FTBs at the moment so they can easily afford to ignore their views and opinions.
There are some very welcoming EAs on this site and I am ashamed for them that the bad reputation the profession has is further bought down by random insults to respectful and intelligent posts from non-EAs here.
If you think everything is fine and dandy in the housing market right now, go and post that on HPC and back it up with proof. For the record, there are more EAs that post on HPC than vice-versa. They are warmly welcomed for the informative comments they make to the discussion. I am not going to defend any aggressive comments (more of which come from EAs on this site than HPCers), but I think a polite discussion is something everyone, incl HPCers, can learn from, as opposed a thread of childish insults.
@rant. You seem to have taken it personally, but as they say if the hat fits .........
Not relevant to the lead story of many threads on EAT would be my answer and serves no purpose but inflame. Too much childish have a go egos and personal attacks on other posters is not good manners IMHO and takes time to weed through.
If something is important, relevant and will make a differance .... is fine with me.
WT - OK. Please do highlight what I've written that you think is "c***p". To avoid boring everyone else, please do include the facts and figures to back up your points.
@rant do you realy need to ask such a question!
@Ric just goes to show that it is not a perfect world. I'm suprised that a CW agent managed to sell at the prices you suggest. Having dealt with many over the years they do have a good track record of getting not what is being asked. I once did an analysis on agents asking to sold prices from the Land Registry in 2009, the result was no suprise, they were not getting anywhere near the asking price. When I compared it to our data base of valuations, we were pretty spot on. You may want to see if the sale actualy complete and have a look at the Land Registry. Ever had the solicitor (sometimes the buyer) try an re-negotiate when they see previous sale price on the property during contracts. What I would like to hear is how the surveyor is going to support the valuation?
"Point in case yesterday. I valued at max asking £250,000, the vendor purchased new build in top top condition 2008 for £210,000 but replaced the kitchen (it's fab). Another agent valued at £375,000!!!!!!!!!!!!!! "
Jesus christ, this is what we're up against. Even 250k is a generous starting point (depending on when they bought in 2008) but 375k? FFS.
Fantasy vendors having their avarice and ego massaged by desperate EAs that will do anything to secure the listing.
If I were an EA i'd be hacked-off not least if I knew I was good at my job if 'success' is purely down to what figures one can pluck from the ether.
so many micro markets are showing so many different stories though...
Again one office I have up aginst a CW agent..in the North (Stockport Area)
House worth (we thought) £400,000 based on having sold the last three identical ones on that road for £380,000 ish in the past 18 months, CW put it on at £500,000 we laughed, they sold one week!
Around the corner, just valued one we sold to the current owner for £650,000 in 2007, market crashed since and risen a little, we said £750 to £795 as improved it (slightly) lost to a CW agent at £895!!!! we really laughed nothing in this area has ever achieved above £650k you guessed it CW sold it asking asking price 1 week!
I thought after 20 years in this area and selling 20 to 25 a month on average at this office I had a pretty good idea when to be bullish (I have been saying be careful on the vals there is a change in the air and be realistic, I am 36 years young so not a grumpy old git!).....but I have just told the branch manager at that office to load 10% for sure if that is happening otherwise the 15k commission is going to the wrong company! That office by the way knocked up its 20th sale on the 15th of May!
less than 3 miles away one of my other offices (where I am sat now) 5% too much can mean it sits for 6 months....very odd times for my company, with mixed fortunes for each office! (3 in total)
PS: @James Class post, love it....RANT would be proud of such a comment from a HPC'er I am sure!
WT - Could you let us know specifically which poster's comments you label as being "c***p"
I see several comments on this thread suggesting people should not try to sell now and that amounts need to be 'hacked' from asking prices. They are posts from EAs by the way... I'm not sure that this website would be the best forum to hurl insults at colleagues in your industry.
@ Realist getting to the point.
@PeeBee. Old chap no problem, maybe I didn't make it clear, a bad hair day and fed up sifting through all the c***p from the HPC and Co brigade. You are perfectly correct with your diagnosis. However the point I was making is ..... vendors want EVEN MORE than the property is worth when being vauled. I see it most days and some looney agent comes along and values even higher and up it pops onto RM. The consequences are the next vendor sees it and wants to join in and can't understand why the agent is saying it's several thou less when others are putting on for so MUCH MORE, even higher than 2007 prices. The same vendor then argues when they put an offer forward that everything is over priced and their offer is ludicrously low. Two bites of the apple.
Point in case yesterday. I valued at max asking £250,000, the vendor purchased new build in top top condition 2008 for £210,000 but replaced the kitchen (it's fab). Another agent valued at £375,000!!!!!!!!!!!!!!
The most ludicrous value to date is a £625,000 property in a run down disadvantaged area by an agent who came into the market during the boom and never done this type of work before. No it hasn't sold for the last 3 years.
RM don't help having a web site that does (fact) have some ludicrous values (not all).
9 sales .... you won't be changing your Mercedes anytime soon!
Chris - "Just to wind up all the HPC people here using our site, perhaps all the valuers here should continue overvaluing property and eventually there will be no more cheap properties out there and the actual selling prices will be forced to climb. Oh right, we're doing that already, great. :-)"
The flip side of this is that potential FTBs will just refuse to buy at those prices - which is pretty much already happening. Who will blink first? The well-documented forced-to-sell types or the don't exist forced-to-buy people?
Any stand off will ultimately be won by the buyers at the expense of those who must sell. This will bring prices down across the board.
9 Sales - I would be slitting my wrists at nine
Agents MUST educate vendors on asking prices instead of listing for ENGLAND which many corporates do, then batter clients for reductions it is time to get real and list correctly.
Chris: Further to your comments re Mr F-Smythe, you missed perhaps the most important point.
Mr FFS states "As a profession we - and indeed many buyers... have far more to gain from a short, sharp correction and a return to normal trading, than in prolonging this, at times, near-zombie marketplace."
WE?? BUYERS?? Someone better remind Mr FS:
1. WHO HIS CLIENTS ARE - and
2. WHO PUTS FOOD ON HIS TABLE
before they all desert him and enlist the services of an Agent with THEIR interests at heart....
@ FFS
"as the country at large - have far more to gain from a short, sharp correction and a return to normal trading, than in prolonging this, at times, near-zombie marketplace"
I'm not sure it would make much difference. The banks don't want to lend money at the rate they once did, so the high volume selling days are well and truely behind us and we are back to early 80's transaction levels for a long time to come now. You know where you sit down with your bank manager and hope that he see's you as a safe bet and gives you a mortgage. A massive correction will mean more people in negative equity, more repossessions, more bank losses!!!
If this happens, do you see the banks doing:
A) Lending more people money, which increases the transaction levels as you describe?
or
B) Freeze lending while they demand another government bail-out, eventually selling the repos at rock bottom prices, refill their coffers from savers and see that prices have stabilised again plus a few years growth just to make sure!
Hmm..... let me think. Option B perhaps!! Much to the delight of all the HPC bunch no doubt!
This is the new market and it will hopefully stay this way for the foreseable future. House prices and transaction levels bimbling along like they do on Mainland Europe.
When my parents put their home on the market in Holland, the board man dug a hole in the garden, poured a few buckets of cement into the hole, drilled some holes in it once dried and mounted a stainless steel post & for-sale board. When they asked why they had such a flash board, they were told that it needs to stand there for a long time! The average length of time on the market was 17-months and they were lucky, it only took them a year to sell!!!
Just to wind up all the HPC people here using our site, perhaps all the valuers here should continue overvaluing property and eventually there will be no more cheap properties out there and the actual selling prices will be forced to climb. Oh right, we're doing that already, great. :-)
Don't let your vendors give their homes away! Sit tight, the market will improve soon and they will get a fantastic price! There are almost no rental properties available either. The boom times are back. Ye.........ha!!!! Lol
F-FS - Glad you had a busy day. Your insightful analysis was indeed missed. Once again, I've found your post to have some very wise words in it.
Why does young Miles keep wetting himself about bugger all?
@Valuers United
I spent over 20 years lending big amounts based on the work of valuers and surveyors, and know exactly the difference and which does what.
I also know how valuers work and reach their decisions and I may be wrong but very much doubt they have changed that much in the 18 years or so since I approved my last mortgage (based with a clear conscience on 3x income or 3.25 joint and not forcing the borrower to take an endowment policy, PPI or anything else either just to earn an unjustified commission).
I've been rather busy today (about which, I'm not complaining) so have missed the fun and games about this latest statistic, which just reinforces how silly things have got, and in particular the degree of seller delusion out there that I have to say seems to go unchallenged by many colleagues.
A couple of things: back when I was studying statistics as part of a business degree we did rather a lot of work on population size and distribution.
It seems to me that whatever you think of Right Move, they are working with substantial bodies of highly-representative data, and the huge gulf between asking and selling prices is indeed a real phenomenon, not (at some have suggested) driven only by some sort of weird selection process that counts only Surrey detacheds in the asking prices list, and Northern terraces in the sales column.
Sensibly priced stuff is selling; yes there are a few people still prepared to pay high prices over the odds but the number of 'greater fools' out there willing to pay 2007 prices is dwindling. This means the high-priced stuff AT EVERY LEVEL OF THE MARKET isn't shifting. Ergo, the difference between asking and selling prices.
It doesn't mean that every house needs £50k or even £100k hacked off the price to sell (though quite a few could do with that, and more, before I would take them on). But that, as some have pointed out, there is a difference between being on the market and marketed to sell.
Anyway I no longer play silly buggers over pricing, my stock levels aren't the 'highest ever for May' as I refuse to market at stupid prices. I trust straight talking and honesty will eventually be rewarded - it's stood me in reasonable stead so far. People come on with us who actually want to sell, and that word is getting around.
Meanwhile, is anyone else wondering whether the reason some colleagues are so reluctant to see the market properly correct is that they have a secret stash of BTLs collected too late in the day? I can't help think that for some, personal gain is overriding professional judgment.
As a profession we - and indeed many buyers as well as the country at large - have far more to gain from a short, sharp correction and a return to normal trading, than in prolonging this, at times, near-zombie marketplace.
Thankfully though, it wasn't so zombie today!
the yorkshire agent: I know - 9 looks a crazy, unrealistic number (it WAS theoretical, remember...) - but please remember that nearly a quarter of the month was bleedin' Bank Holidays, mate!
The fees that PeeBee & Co theoretically charged were EXCELLENT - as you would expect.
Theoretically they made up for the theoretical lack of theoretical business in the theoretical month... ;o)
Thanks Miles. Thats really usefull.
@Yorkshire Agent - Are you on RM yourself?
If so................. it surprises me you are happy that RM write this? Do you not think RM should perhaps stick to writing new contracts for the corporates to fall in line with the indeps and writing full page national press advertising campaigns to show they are spending your money better?
Like PeeBee, Rant and James say Stats, Stats , Stats , look at Peebees example and James for that matter!
I appreciate RM will always be a source of data but lets not applaud them for basically promoting a falling market!
For the sake of clarity, I believe this survey analyses initial asking prices only. Any further reductions wont show up in the data.
well explained PeeBee, although I'm glad rightmove have press releases of this nature as it 'should' encourage vendors and estate agents to be more realistic. I appreciate Pee Bee anc Co is a hypothetical company - but come on old chap 9 sales!!!! if only
wooden top: I don't do this often (in fact I can't remember the last time I did...) - but I disagree with your last post.
In fairness, 'disagree' is probably the wrong word. It just seems like you have now been taken in by the antihype and have gone into doom mode which is welcomed by the HPCers with open arms.
Look at what you said: "Just goes to show who actually is in control. Certainly not the estate agent who gets all the flack. The person asking for more is actually offering less?"
Asking prices have apparently risen. Yeah - so what? Oh - SALES prices have fallen - is THAT what this is about?
If the market is true to its' last fifty-year form, higher-priced properties sell less readily than those which are cheaper - come good or bad market. So - the AVERAGE price of sales agreed will ALWAYS be lower than the average price of LISTINGS, because MORE lower priced properties will sell than higher priced properties.
Quick fictitious example.
Listings of PeeBee & Co last month: 11 properties - 1@ £1.1 million; 10 @ £450000. Total value £5,600,000. Average £509,090.90.
Sales of PeeBee & Co in same period: 9 properties - 6 @ £440,000; 3 @ £450,000. (All were listed @ £450,000) Total value £3,990,000. Average £443,333.33.
THIS EXAMPLE shows a 'drop' of £65757.57 PER PROPERTY - yet they were all sold at no less than 97.75% of FULL ASKING PRICE!
Lies... damn lies... Rightmove "statistics".
Numbers will say whatever someone wants them to.
Show me an Agent - JUST ONE - anywhere - whose AVERAGE sale price is only 67% of asking price.
And I will show you a locked door to an abandoned office with a heap of mail all awaiting payment.
Agents - you all know this simply isn't happening the way it is being portrayed - SO WHY STAND THERE AND TAKE THE PUNCHES PEOPLE ARE THROWING?
First Time Buyer - are you stupid????
Maybe a silly question as I think I know the answer.
All that the average AP and average SP show is that there is an imbalance in what is being offered for sale against what is in demand.
If all of a sudden the only houses that were selling in the UK were small terraced houses at £50,000 in the North where would that leave the average asking price of a semi detached it would not come tumbling down to meet the national average house price would it?
Ever heard the phrase most sellers are buyers?
Just goes to show who actually is in control. Certainly not the estate agent who gets all the flack. The person asking for more is actually offering less?
Come on estate agents take back control, your onto a hiding if you don't. That'll please the anti-agent brigade.
@Brit1234
I have not said prices will be cheaper in a couple of years - I am not clairvoyant. I have said it will eventually come down to supply & demand (plus the rest of my post).
If eneough houses are not being built and the population keeps on growing - what then?
RE Ray Evans "My advice is if you do not have to sell, can afford the mortgage, stay in the smaller house, stay in the same job, and review in a couple of years.
Relax! "
I agree house prices will be a lot cheaper then so the difference to a bigger property will be smaller.
Unless you can sell not and stay some where else for cheap and buy in a few years when property is a lot cheaper. May be hard to do in this dwindling market.
Average Asking prices = £240,000
Average Selling prices = £160,000
Can any Estate Agent spot the difference?
Asking prices continue to rise and selling prices continue to fall.
Is it EA over valuing by a 1/3, is it sellers overvaluing by a 1/3 or a combination of the both.
One thing sticks out and that eventual sellers are not going to get near their asking prices so why the stupid games?
It may take another year or two, but it will all eventually come down to supply & demand. Yes, buyers are scarce mainly because a lot of it is down to moneylenders not lending (never mind the reasons). Small builders are not building but it is reported today that for the larger builders new build prices are up!.
My advice is if you do not have to sell, can afford the mortgage, stay in the smaller house, stay in the same job, and review in a couple of years.
Relax!
Tip for the Day
Yes, being the second agent does work well most of the time and we certainly keep in touch with the vendors... but at the risk of sounding like a spoiled competitive brat .. I miss the thrill of winning the instruction outright.
It's particularly galling when they tell me they know the other agent is talking rubbish but they want to try the inflated price anyway.
Some of those other agents are 'locking in' for 26 weeks and charging £450 for an EPC, the same price they charged for a HIP.
@Tip of the Day - Spot on with being second in, always better! you can still make the 2 weekly calls that the agent who has the property can make but with a different objective! Trying to sell them a property....they will eventually think bloody hell the other agent tries to sell me a property and mine tries to fleece me show a service a vendor expects, SELL SELL SELL!
@Rant - Paying rightmove for me is so they advertise my properties on what is (love them or hate them) a popular portal...HOWEVER I dont pay them to talk the market down!
If I were a PR person at RM I would be thinking the harder the market the more casulaties the more agents will be forced to come off RM! (that said this would result in increased fees the following year)
@ Rantanrave - one pays per month and not per property for RM and other portals....so the cheap can be thrown in with the overpriced at no extra cost.
Surprisingly I have been to Fuji and Fiji...
If Rightmove's prices are high, as a non-EA, I'm wondering what the purpose is of paying them to advertise a house that is significantly overpriced in relation to others that are similar? Overpaying to advertise a house that is reasonably priced and likely to sell I can understand, but not one that is overpriced.
Needless to say I'm not familiar with RM's payment model, so would appreciate someone (gracefully) explaining if I've got this wrong.
Absolutely. I have highlighted where they hit gridlock, not compared the two against each other.
However, for each HPC follower who screams for a bargain property, a seller is entitled to demand full whack for their home. It's two selfish opinions on opposite ends of the scale. No party is more right than the other.
I have a couple of friends who are beginning to follow the HPC crowd. Not follow, but take a look now and again. They openly admit it's a bit of a joke, certainly don't support their 'values' but at the same time would love to snap up a house at a silly price...that's all there is to it. I imagine alot of 'followers' are of the same belief.
I may join on that basis!
Fiji is very nice I hear, never been unfortunately.
@ Anna & @ Paul - being the 2nd Agent is sometimes better than being the 1st!
Let the 1st Agent take on at unachievable figure and waste 12 weeks proving what the Vendor really knew deep down that their property is overpriced. A clever Agent will keep in contact with any lost instruction and when the Vendor decides a fresh new Agent is needs it will be you who he/she calls and if you are any good you will get the property on at a greatly reduced price (no point otherwise)
As I have said before I like RM, particularly because of the tools they provide.
I have just done a quick survey (by postcode) of properties on the market in my area for more than 10 weeks (use best price guide and set the date for the end of February).
The surprising thing is how many properties have changed agents and NOT sold. Even more surprising is how many have stayed with the same agent and sold from a reduced asking price.
Whatever way you look at it - it is not fair, it is not right, BUT overpricing WORKS (if you do it properly).
You need to be able to organise viewings that generate low offers (real offers or "well they suggested they might pay X - a tactic used by a lot of corporates where when a buyer says didn't like it they ask "ok, but if you were going to make an offer how much would it be and why?").
After 2 weeks you review progress and generate a price reduction.
Continue until under offer.
If you are set up to do this, IT WORKS.
Bit horrid though.
Not quite Mr. Fuji (nice name btw - ever been there?). There are forced sellers who have to sell for a variety of reasons. The concept of a forced buyer isn't comparable. Those who have to sell will do so and that will set the price for comparable properties in the area.
For every HPC nut wanting dirt cheap prices, there is a seller who is not prepared to satisfy them and protect their own interests.
Both parties looking to profit themselves. The sellers won't sell and the 'buyers' wll continue renting.
Well said Vossy.
Put two numbers to a vendor, one of asking and one of acheiving and they NEVER hear the latter and harp on with 'but you valued it at (the higher price)' or they go to another agent with the line back to you 'I had a higher offer'. I have challenged vendors on this one with 'so you sold it at a highr price than I suggested then, that was quick'. That fools them and I realise at this point I do not want to deal with them anyway.
However they then want you to market at more to get in their pocket the marketing figure. So we foolishly say yes and hence this kind of report bites us in the bum.
I agree Rightmove should change the way they report.
How many times do we say OK idiot vendor we will try for a short while and when we ask them to bring the price down they go selectively deaf and go off to another agent and they get it at the smae price you offered it at previously and this happens over and over again.
Anna gets to be the second agent as she says below - we had better watch her!
Sound familiar?
This is where it all goes horribly wrong for EVERYONE.
Let's face it, who here, when speaking to a potential client last year, didn't utter something along the lines of 'well the market has recovered surprisingly quickly'... and so it appeared it had. BUT you all knew deep down that such a remarkable recovery just didn't make sense. Didn't you??
I believe the market merely 'skidded' in 2008/2009 - the real 'accident' is about to happen.....
If you aren't already looking at ways to reduce your overheads, i suggest you begin today. Now. This minute.
Who goes? YOU decide.......
The usual meaningless numbers. You could interpret it as higher quality property coming to the market while guide prices remain relatively unchanged, we just don't know with these figures
Earth calling vendors, your mothership has arrived.
@ Industry Observer...sorry but you are incorrect. The term Valuer was used over Surveyor as a valuer is only interested in the Value for lending purposes (obviously if structural defects are noted then they will report back).
Value is judged by comparable method i.e. by comparing with what has actually SOLD and NOT by what a Vendor fwould like to think their property is worth - one is real facts and the other speculation.
I do not know of one Lender who will lend based upon asking prices, for as we all know, the asking price is NOT a true reflection of a properties value.
@ Ann - spot on with your assesment.
Ric - I couldn't agree with you more.
How I hate seeing this kind of tripe reported knowing that the would-be vendor will only read "the highest level for nearly three years".
To me a vendor has a choice, they can be on the market and sell or they can just be on the market.
We aren't getting a shed load of new instructions at the moment as we won't overprice but we are getting a steady trickle (enough) of sales. Not surprisingly we are often the second agent in.
sorry and "some" who are in an area!
To all the agents out there who are selling, listing at good solid prices and come who are in an area where price have risen or holding out well....(and those who are not)
This is another reason we should stop paying RM money and join forces using perhaps my suggestion in the other thread.
We pay RM good money for them to tell buyers asking prices are wrong! No I pay them to advertise my properties and NO MORE.....imagine Auto trader doing the same...sell you car and then next line, cars are not a good purchase!
Should all RM paying agents put up with RM undermining the people who help them exist!
@ Vossy
Ermmm??
@ Anonymous Coward
I think we'll easily break the 64 barrier!
Well after a week out of the country it's nice to return and see nothing has changed. First item talks about increased prices, the very next one about reduced lending. I assume all these sellers who are "pushing up prices" (or should that read "sellers who are not being discouraged by estete agents from pushing up prices"?!!) are expecting hoardes of cash buyers?
Lunatics running the asylum.
By the way the post on what surveyors (sorry, valuers) do when valuing for mortgage purposes is totally wrong. They go by asking prices and, these days, the LTV being sought.
When will Rightmove and others realise that Asking Prices are NOT a true reflection of the property market. Valuers do NOT use marketing prices when valuing property, they use actual prices achieved i.e. what has actually sold. If Rightmove did the same their statistics would tell a very different (horror) story.
Thats my rant for the morning.....feel much better now.
I refer the hounourable gentleman to the answer I gave some moments ago...
This website has been full of comments over the last few months on this subject.
Can we beat the record of 64 posts today?
Cry "Havoc!" and let slip the dogs of war.
Smell the coffee. Sh1tslide's right on the money again...
"Average unsold stock rises further from 74 to 76 properties per branch, reaching highest EVER level for May..."
"With new seller levels down some 30% over the extended holiday period, there seems to have been a knee-jerk reaction PANDERING to sellers’ pricing aspirations rather than accommodating the REALITY of low buyer numbers. With buyers also distracted by the
attractions of bank holidays and warm weather, and viewing royal weddings rather than property, these
sellers could miss out on the rapidly closing spring window of moving activity by pitching onto the
market at near-record asking prices”
The only upward pressure on asking prices is coming from idiots.
So, going by the last sentence, new vendors should on average expect to slash their initial asking price by a third if they want to get a sale.
D o h !