Lack of buyer demand and low levels of supply got the housing market off to a poor start this year, the RICS has reported.
In its usual baffling RICS-speak, the survey said that 7% more surveyors reported that demand for property fell rather than rose.
New instructions were also “moderately negative, with 3% more surveyors reporting instructions fell rather than rose”.
Newly agreed sales continued to drop, while weakness in market activity was also reflected in actual sales transactions.
RICS estate agency members sold an average of 14.6 houses in the three months to January. This compares with a reading of 15.2 in December and is the lowest figure since June 2009.
Meanwhile, 31% more surveyors reported that house prices fell rather than rose in January.
RICS spokesperson Ian Perry said: “Uncertainty over the prospects for employment, alongside the shortage of mortgage finance, particularly for first-time buyers, continues to weigh heavily on transactions levels.
“However, there is a very clear regional pattern emerging, with London seeing a greater level of price resilience, while in much of the North and Midlands the market remains under greater pressure.”
A total of 241 surveyors, covering 337 offices, took part in the survey. Although a small survey, the RICS says its monthly report is taken into account by the Bank of England’s monetary policy committee at its meetings to set interest rates.
Comments
Memo to Fortescue-Smythe (sounds like a surveyor to me!). Not on the sherry, happy pills or anything else. Am still in the office though. Working on deals.
You miss the point. Markets vary from one town/area/region to the other. Sad but true.
Many parts of the UK are still struggling desperately. Also sad but true.
But I'm sorry if it wrankles with you, some aren't. If I had my head in the sandbucket (sic) I wouldn't see buyer numbers, viewings, sales etc up.
And if you don't think confidence is a factor, that could explain a lot. Sad as it may be, people (including you it would seem FFS) BELIEVE what they read in the papers especially when it comes from 'credible' sources such as the RICS.
On that point FFS (it's too late in the day to type in your full monicker), there are nearly 24000 estate agency offices in the UK, so I'd suggest a sample of 300 is worse than meaningless, it's misleading.
You may not be able to talk up a bad market but you can certainly talk DOWN a good one. All I'm saying is balance the story.
As for the facetious (you look it up...oh that's me being facetious isn't it) comment about millionaires island, a county wide business (along with similar feedback from those in neighbouring counties) is hardly an island and an average price of £350k wouldn't interest the millionaires.
But well placed commuter towns, decent equity levels and people with less of an inclination to max out their credit card makes a difference and is the sort of market lenders want a piece of (hence our FS side just having their best week of new business for 2 years).
I'm sorry if you are struggling guys, but don't rain on someone elses parade.
Will Hicks:
The contract is between the vendor and the agent (ie the vendor pays the commission fee on sale) so that is where the commercial relationship lies and I can't see any alternative. But a decent agent will do everything he or she can to keep buyers happy (they may be sellers in a few years after all).
Of course its unscrupulous (and in a falling market, downright stupid!) to win an instruction by over-inflating the valuation. But there are a lot of sellers who are all too prepared to go with the highest 'bid'. Vendor greed more than anything is what drives this.
I try to be straight with people about the chances of achieving a price but it's only an opinion after all (albeit grounded in experience) and you do get more than the occasional seller whose instinct is to shoot the messenger when the valuation isn't what they expected!
If an agent started working for the buyer, when it is the seller who is their client and who is paying, there would be a case for claiming against the agent?
Also, just because some cannot afford to buy, the product is overpriced is it?
Nobody has the 'right' to buy.
The dumb lending has stopped. Unfortunately the dumb vendors are only just beginning to get real. I think it's time the EAs started working on the buyer side more & stood up
to the greedy baby boomers. I want to buy a house, but I refuse to deal with property clearly marked 15-25% over sense. Zoopla is getting more accurate by the day. Quite happy to see my savings keep growing and rent. The usual "renting is dead money" is now total nonsense in this falling market, especially with the lenders charging ridiculous rates given what LIBOR is doing. SBC: Mexican stand-off indeed. But, as they say in Afghanistan: "you've got the watches, but we've got the time".
F Fortescue-Smyth:
Your glass seems to be always half empty.
However, regarding the third para. of your latest post, may I refer you to my last post.
El Burro you've either been at one too many sales courses ('confidence is key' - get some Colgage then!) or you've started too early on the sherry.
Confidence can't talk up a market that already in serious trouble. The banks simply aren't lending at these prices. They have to come down. You can't opt out of reality by repeating affirmations to yourself in front of the mirror.
I'd be a lot more confident if I had more sensibly priced properties on my books and fewer deluded sellers stuck in 2007. Post like yours just encourage these people to hang on to inflated expectations, in defiance of what's really going on.
An air of false confidence - other wise known as head in the sandbucket - does no-one any favours.
300 is a pretty big survey. I appreciate there's the odd exceptional pocket like your millionaire's island persumably where bonus time will no doubt soon be upon you but if you are indeed being honest and not just puffing out hot air, then you are very much the exception.
Getting back to the point of the 1st post from busy agent (ditto me hence getting the crumbs from my ridiculously healthy granary sandwich all over the keyboard as I'm not going to get a chance to go out)....
New applicants, viewings, sales all well up on this time last year and overall 2010 was a good year as was 2009.
I accept that in different parts of the country it isn't so good but we're sick to death around here of people 'calling the market' based just on those areas that are struggling without ever referring to those parts which are going well.
As for the RICS, in our part of the home counties, their involvement in estate agency is zero, you can count the number of RICS estate agents on Capt Hook's bad hand.
Where's the credibilty in a study that covers just over 300 offices? With such a small sample RICS should either qualify their stats or, which would get my vote, say nothing at all.
We put out press releases but they never see the light of day but the media only print the negative. Confidence is key and the sooner Hugh Pithy-Tugwell-Smythe FRICS and his Boys (all surveyors call non surveyors 'Boy', it's in the Red Book) get the message the better.
Qutie right, Ray.
To be a GOOD businessmen/woman you just simply can't do business with everyone.
If a potential seller wants to market at such a high amount, you offer your true valuation and explain the current conditions. If both parties don't agree, then the outcome is a simple one.
Mike Wilson :
I prefer to be anonymous on here but let's say I'm familiar with at least the edges of the area you mention and without knowing more details, it sounds like you most likely struck a bargain at just x2 1988 price.
All depends on location of course and other factors eg other developments around, improvements (a lot of these large houses have been extended or garages built over so we aren't really talking like for like) and so on.
You are right of course even if they do often need kitchens and bathrooms doing, the best of the 1980splaces tend to be far larger in terms of footage than newer properties that are shoehorned into tiny plots, and often have space to extend if not done already, one reason why prices have been holding up to some extent.
Enjoy it! Houses are for living in.
Stop moaning! Don't waste your money!
Just do not accept an instruction at more than 10% higher than that at which YOU believe it will sell for.
Or do you not have the conviction in your ability to value?
Sorry, idiotically forgot to mention where house is ... it's on the borders of Surrey, Hampshire and Berkshire.
@F Fortescue-Smyth
I'm interested in your anecdotals ... whereabouts in the SE are you?
3 months ago I completed on a fairly decent size 4 bed detached - on a nice estate - double detached garage - garden (small in my opinion) but about twice the size of current similar new builds.
The property last sold in 1988. I have just paid exactly twice what it sold for in 1988. Did I get it at a good price? How much do agents operating in the South East who are decrepid enough to have been around in the 1980s think that property has gone up since the previous peak in 1988? (The market stopped on a sixpence and fell the minute the joint mortgage tax relief was stopped).
FF Smythe,
I think you misread my post, i'm not having a pop at EAs (in fact nowhere have I in any of my posts) but bemoaning the vendors' mindset (as you so illustrate with your anecdote).
True DBNO, based upon what you say it stands to reason that sensibly priced properties will sell. Given the ridiculously low IRs I presume some would-be-vendors don't have to sell for 'less than what it's worth'.
From what i've seen so far, the only competitively priced properties tend to be distressed sales ie probates, repos and seperations. The corollary being that non-distressed vendors have no need whatsoever to drop their prices (regardless of % equity).
Suffice it to say, I wouldn't like to be an EA right now having to massage peoples' expectations; with the knowledge they might flounce-off to a rival because of percieved under-valuing.
rant&rave & SBC:
Don't always blame the agents in all this. I had dealings recently with a retired teacher who can only afford to run her very large 4-bed detached place in a lovely SE country setting by renting out three rooms to assorted weirdos.
We had dealt with her before: top of the market autumn 2007 valued at £575k so she insisted we market at £625k. Result: predictable, hardly a viewing for a year. Takes it off, and continues to live with the weirdos. Calls us again this autumn, looking for a 'quick sale', We look again, we say it's now £495k absolute tops and if she wants to sell quick, try knocking £50koff (slightly smaller place round the corner but with pool and bigger garden has been on for a year at £450k, no takers, but this place is more saleable I think, not everyone wants a pool!).
Didn't like our honest advice, went elsewhere. Found an agent without much local knowlege who told her there were two houses in the development went for £605k and £590 in last two years, put yours on at £595k. (These are houses we know, the first has a two-room + loo + kitchen granny flat built on, the second five beds, an extra loo and a hugely extended kitchen. So not comparable).
Result she puts it on at £595k, reduced after a month (I assume due to laughter following first viewings) to £565k. Still way too high.
This house will sit, I estimate, for a minimum of another year while this stupid woman waits till the good times to roll again. Incidentally she bought it new in the 80s for (I would estimate) around £100-£120k, and hasn't MEW'd to my knowledge. There's no 'necessity' here, it's pure greed and bloody mindedness, just one example of dozens I know of.
@SBC
In simple terms most vendors want to sell for at least what they paid. The majority don't even factor in such things as inflation. They just don't want to "lose money". It therefore follows that vendors who bought pre-2005 are happy to market at a reasonable price.
Trouble is the majority of current vendors seem to have bought post-2005 and are asking for an unreasonable price. In my opinion they should be sitting tight and paying down the mortgage anyway.
As an aside I know vendors, prospective FTB's, who won't even consider a viewing unless their research shows an asking price sub-2007. I also know agents who are selling their own property quickly (a matter of weeks) at prices around the 2006 level. Read into that what you will.
@SBC - that also suggests that there is a lot of pent-up supply out there, ie vendors who have held back from selling while waiting or 2007 prices to return. Plenty of evidence of this around in the numbers of accidental landlords out there.
How long before those sellers realise they aren't going to get the peak prices they want and decide to sell sooner rather than later in a falling market?
Some interesting comments on here; the views of which substantiate those on HPC (yeah, yeah, I know) insomuch that the market is at a standstill primarily because of 'fantasy pricing' and vendors haven't cottoned-on the fact that 2006/2007 it ain't.
It stands to reason that the banks are factoring-in more falls (be they moderate ie 5% or severe ie 20%) hence their punitive lending requirements. Similarly, a lot of people in my position refuse to buy at seemingly inflated prices. Result is this Mexican stand-off.
From your guys/gals point of view, are vendors starting to come around to the new reality or is it an up-hill struggle? (Of course, this is predicated on the presumption that vendors have any equity in their homes to take a hit of £x).
I agree entirely with F Fortescue-Smyth.
In my part of Hampshire instructions are quite thin on the ground but property marketed at the correct price is flying off the shelves. Demand is there. The problem is a lack of volume.
Most vendors, egged on by agents are still trying in vain to achieve 2007 prices. Many are BTLers who got in too late chasing capital gain, hoped for a "return to normal" but have belatedly realised that the game has changed and decided to throw in the towel.
Current asking prices are a waste of everybody's time. What's the point of winning an instruction if there is no hope of a sale? We incur costs for no reward.
The sooner people realise that the world is different to 2007/08 the better for everybody.
This is very patchy stuff
Some of my offices have got off to a good start and neighbouring offices a very slow start
So much fantasy pricing around. I'm meeting people regularly who still think it's 2007 and banks are dishing out cash like there's no tomorrow. People need to get real.
Once place recently (not with us any more) just completed after being on-off market since late 2007 (with tenants in between). Paid £353k in 2002. Put it on at £550k in 2007 (stupid sod). No interest for a year.
Dropped to £495k for best part of a year. Dropped to £475k, £450k, £425k then £395k for another year. Sold in Nov 2010 for £380k (and I think he was lucky at that). Interest only mortgage in the first place - so what was the point of that then?
Sellers need to get real and we need to help them sober up. In our area (not London) we have new stock five bed bungalows and old stock three bed bungalows on at the same price. Guess which are getting the interest?
I do feel sorry for those people who got in over their heads in the last few years of the boom and will need to tough it out and pay down negative equity for quite a few years before a move is on the cards, but by far, most sellers asking silly prices aren't in this position, they are just greedy sods who can't bring themselves to admit they missed the boat.
I disagree 'busy agent' - we have had a very slow start to the year and a bad back half of last year, the country is just full of pockets of different markets. Its 9.10, I've read my e-mails, had a look on estate agent today, drunk some coffee and thats about it for today. Oh christ I'm going to have to lower myself to do some touting and hopefully scrape the odd instruction which has been stuck on the market with another agent at a silly price in the vain hope that they may see sense and reduce to the right price one day.
i really cant see where the RICS get their figures from we have had a great start to the year with good instruction levels and sales, one simply has to manage your business correctly and manage vendors expectations in current market conditions. surveyors need to get a little more positive and the banksters need to pass it on.