How many houses actually sell?
Reaction to last week’s article ‘Only 40% of homes on the market will sell – warning’ stirred up direct and indirect comment from EAT readers. Some understood what I was saying, while to others I should have been clearer.
But what we all appeared to agree on was that the total number of homes that actually sell came as a surprise.
Several readers asked if it is possible to see the same (flawed?) data for previous years.
I have repeated the calculations back to 2003 and you can download the results from the links below (sorry, but we can’t yet display them directly here on the EAT website).
Let’s start with the basic premise behind this. The question is: ‘How many of the houses on the market actually sell each year?’
To answer this you need to know:
* How many homes are on the market at the start of the year (all those left unsold from previous months).
* How many come on each month.
* How many sell each month.
I am a property magpie. I collect data published of homes for sale and to let, and sale prices, and like others I watch the property portals, HMRC and the Land Registry. I think I see about 98% of all homes offered for sale or to let in the UK.
One thing that is hard to do – but as readers pointed out is essential – is to try and de-duplicate the homes that are on the market with more than one agent. This is an inexact science but one that I am getting better at. Using postcodes, prices and in some cases complete addresses, one can make progress with this.
I get help to check my own figures from a variety of sources including the portals.
Last week in their monthly update Rightmove confirmed how many homes they think came on to the market last year (1.3 million) and the number sold. Each month I record how many individual or unique addresses I think are for sale/to let, but there are others who do this too.
I’m sorry to spend so long on the methodology of how I work these numbers out, but much of the concern expressed about market indices and commentators in general starts with ‘How the hell do they know?’ By seeing almost 100% of the market I think I know.
Looking then at the results since 2003, we see that it is not unusual for less than half of all homes marketed to actually sell in any year. It’s one of the reasons why agents have to charge higher fees than the public expect – you have to cover the cost of the properties that don’t sell.
Looking back, 2005 and 2008 were tough years with less than 35% of available stock selling. In 2007 (the peak of house prices nationally) we saw 51% sell.
It’s no coincidence that total fees earned by estate agents peaked in August 2007 at about £318m. The monthly average is usually £169m, so you can see what a difference this makes!
Last year when we look at all the numbers, just 41% of homes marketed actually sold, and admittedly on just one month’s numbers, it looks as if in 2011 that number will fall back nearer to 33%. As the year progresses we will see how this changes.
In conclusion, for the last couple of years the total number of sales has been worryingly low, but this year we expect to see more homes come to the market, each of which will have an opportunity cost to the agent that is instructed. It is this ratio that I suggest estate agents should watch – for all sorts of reasons.
Links:
https://files.me.com/henry.pryor/nzbvi2
https://www.estateagenttoday.co.uk/oldeat_news_features/Only-40-of-homes-on-market-will-sell-warning
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Comments
Funny that... my missus was gutted you turned me down!
Take away the 'property' and there's already two mad people living together!
PeeBee, you have my word as a (relatively) honest Agent that I will do everything in my power to top 75% NI-SSTC conversion.
My husband was quite amused at the marriage proposal by the way!
CL - I'm not usually a betting man, so as to what I expect to win, I am at a loss. What were the odds? I reckon I made a fairly safe bet - and my faith was rewarded.
You have already turned down my marriage proposal (probably just as well - two mad property people in one house may have been dangerous...not to mention the wife and husband we would have to let down gently of course...) so I suppose just your promise to top 75% will suffice!
Even money... win:win all round (except our HPC buddies... ;0) )
And imagine what the figures will be when I move to the new place with a stock list and pipeline three times higher!
So, what was the wager for 72%?
I stand by what I said to TFP on Hendry's pile of ... excrement. Figures can be manipulated, depending on what you want it to show.
CL: WAY TO GO!!, that office!!
This means that EITHER:
You had an EXCEPTIONAL YEAR, and someone out there (...and you know who you are...) had a ratio of less than two in ten sales to even out the averages, OR:
My suggestions that the 'statistics' provided are not a wholly accurate representation of reality. (I choose my words very carefully...)
I refer to MY workings. CL's branch performance is still WAY over what I suggested would be the benchmark - but surely THIS is the more accurate method of assessing how your stock will perform - and what percentage costs you money for NO return...
If you 'lose' say, 30 listings a year (feel free to insert your own figure...) - whether it be to withdrawals, sales by other, whatever, then they cost you. You all know that.
The questions are:
Do you know HOW MUCH they cost you?
And what are you doing to compensate for the loss...?
Hmmm, an offer like that is hard to refuse!
I don't have access to all the figures, as I don't manage the branch so I can't find out how many we had on the market at the start of the year.
New Instructions - Sale Agreed 73.1%. Good guess! What did you win?
THAT'S THE SPIRIT!! ;0)
So, CL - how's about we actually touch on the subject of the article. It's just you and me here - even the originator, Henry Pryor, has left the room! (between you and me, I don't think he likes my questions...)
What do you think about this only 40% of properties sell malarkey, CL? IF I were a vendor (which I am, most of the time...) and my Agent told me he had a four in ten chance of selling my property I'd be looking for a new Agent! Don't forget, I WAS one, several years ago, so I know how the 'Numbers Game' system works - but I have to tell you that I NEVER went into an appraisal with the thought that this might or might not become an Account Raised! If I wasn't going to be able to sell it, then I wouldn't take it on - simple as. And I was working for a CORPORATE! My reputation in the area was based upon selling power. Best price:shortest time on market (the two go hand-in-hand, as you know...), and SOLD boards all over the place. Why should or would anyone go anywhere else to sell?
I reckon, as you can see below, that Henry's figures are, on average, at least 20% out. Compared to the NG system, I would say that is pretty much accurate - unless the figures have changed substantially from when I was 'on the tools'.
Go on, CL, make a happy man very old - show us yours! ;0)
(I wager here and now that you sell 72%...)
I know, it's almost enough to make my last feeling lie down and die!
But that would be letting him win, so I'll try to soldier on....
The man is a cad, CL! ;0)
How he can ignore you, I will never know...
And unfortuantely PeeBee, Mr Hendry has still not answered my e-mail. sniff.
And he thinks Agents are unprofessional....
Sibley's...: Hello again, mon brave!
"A brief hiatus". Sounds nasty. Trussed you are okay now... (get it??)
You have been a miss. I thought for an awful moment that Jonnie had huffed you. He's also been away from the desk for a wee while, and obviously wanted to come back with a vengeance. While I enjoy his craic immensely, I have to say that there are MANY I would rather have seen him have a pop at than your goodself...
ANYWAYS... back to our match. It was not Henry's gaff I was trying to pull out of a hat for you, it was Mr HENDRY - aka Realising Reality (one of the biggest misdescriptions known to mankind...) who I was negotiating on your behalf with. After all - he is the guy who is advocating bringing down property prices to affordable levels for FTB's - I simply asked him to start the ball rolling and give you the first of what I am certain would be a torrent of affordable deals. There was NO REASON, therefore, why Mr Hendry should refuse - the publicity for his cause and his website would have been unprecedented. I am surprised he didn't seize the opportunity - and bitterly disappointed for you.
ANYWAY... last week you wanted to analyse me. I gave you the goods. What was the outcome? Should I expect the men in white coats to come knocking on my door?? ;0)
Ah PeeBee, I'm afriad i've had a brief hiatus so missed these exchanges.
Thanks for trying to hook me up with Henry's property. I trust you fought my corner - FTB, 10% deposit, chain-free, impeccable credit history? These things could have swung it.
With regards to my post you picked-up on and the chap's wdbeast; it's a running joke to be honest. Recognising that it's human nature to seek confirmation bias. So when indices are going my way -% they're spot-on; if they're not +% they're obviously fudged.
Suffice it say, for me the three most reliable indices are LR, NW & Halifax. Sometimes you just have to accept that a +1% (or whatever) means just that.
Henry: In your sbsence, I have been doing some Maths of my own, including a bit of research hopefully to mirror yours.
Having come across the HMRC stats that I suspect your figures for property transactions have come from (they are identical, to within a thousand or so), I noticed there were some notes and I need to draw the following to the attention of all, including, it seems, your goodself:
"4. Up until Feb 2008 HMRC used to receive property transactions counts for all properties and values. Our previous property transactions series table referred/limited to England and Wales (see live tables 531 and 532 for this information). From March 2008 HMRC property counts data is limited to property transactions valued at £40,000 or above. At the same time from March 2008 onwards HMRC publish UK’s property transactions count valued at £40,000 or above series instead of all England and Wales property transactions for all property values. Therefore HMRC no longer update the England and Wales only series that ended at Feb 2008.
5. HMRC estimate that by applying the £40,000 threshold 12% of residential property transactions and 51% of non-residential property transactions are missed."
Erm... for 2010 that surely puts YOUR total to 47% sold.
NEXT: a bit of simple arithmetic. Now call me what you will, but this is all just a table of pluses and minuses, isn't it? SO - let's do the following:
Take the 'number of homes on the market' on 1/1/2003 you show; ADD the "numbers of homes added throughout the year" in 2003-2010, exactly as you show them - you get a massive 16,932,974. THEN add together all the 'number of homes sold in the year' that you show 2003-2010. The total of these is an almost equally massive 10,294,186. Now simply divide the smaller by the larger, and multiply x 10 to get the percentage. Erm... I get 60.79%
OR AM I WRONG?
And another! This time, my fencing opponent, Sibley's... from the same storyline on the HPC website:
"Still, Phd, isn't this a bad thing? "The non-seasonally adjusted figure went up by 0.13%"
Or shall we just focus on the headline..."
Whatever floats your boat, mon ami... whatever works!
You up for another quick assaut, Sibs? ;0)
Henry: I half expected some response to my post on Wednesday - but never mind. You know where I am coming from...
ON THE SUBJECT of picking and choosing which stats best apply, I have just been doing a bit of a "recce" on the HPC website. Came across the following comment from someone called "wdbeast" (they ALL use pseudonyms over there, Henry...) who seems like a regular on the site. You'll like this one:
"At these very low volumes, are the monthly indices from Halifax and Nationwide reliable or should we just ignore the ones we don't like?
I like the Halifax this month, didn't like it last month and I have gone off the Nationwide recently."
So you see Henry, certain people ONLY WANT bad news. A cup FULL, to them, is a cup far too small to take a balanced view from - or just a skewed snapshot taken with an out-of-focus lens to fudge the real issue.
And sometimes - MOST times, I would argue - your chosen statistics feed them well...
Sibley's - sorry, mate, but I am disappointed to inform you that Mr Hendry has this evening declined my request (some would say CHALLENGE...) for him to sell you his home for the sum of £140,000.
I hope you appreciate that this decision was made against my advice.
Mr Hendry has accused me of childishness - and then gone off in a huff! I believe he has performed an act likened to getting sent off in a playground footie game - and snatched his ball back!
I will, naturally, endeavour to resume negotiations with the vendor when his dummy is retrieved for him...
Sibley's...: You analysing me? Bl00dy charming - especially seeing as I'm negotiating you a CRACKING deal on RR's house! :0)
Hmmm - okay - let's see if you can suss me out. You might as well have a crack at it - several other 'experts' have tried and failed miserably!
"On previous occasions, you've admitted to be a 'free-market' adherent and that the market will do what the market will do. In this context, wouldn't such 'doom-mongers' be irrelevant in the greater scheme of things?" Sibley's - you use WAAAY too many big words for a simple chap like me to fathom your drift. Can't we just go back to foils and sabres? I enjoy cut and thrust, as you know... But I'll have a stab at what I reckon you mean.
"Doom-mongers". Let's start with that.
The housing market is a massive cart, with massive wheels. Every now and then. it hits a pothole - and sometimes a wheel comes off. I fully admitthat - been there and seen it twice so far. THREE times if you count the current bumpy ride... The thing is, traffic reports are ALL stating that the roads are filled with potholes. On the TV news; radio news; in the papers - and of course all over t'internet. The media is telling EVERYONE not to buy a new cart until the potholes are all flattened ot - but instead of recommending they all get filled in, it is saying that the top layer of road needs to come off until the surface is level with the bottom of the deepest pothole. Of course, not everybody believes the media - and some will go out regardless and buy a cart. Some don't believe what they see, hear or read themselves - but are so worried that others WILL that it stops THEM getting a cart. Or putting THEIR existing cart up for sale - because no-one will want it unless it is pretty much given away.
Media manipulation. Think asteroid. One heading our way - will decimate the population. So they reckon. When? Who knows. But some will build shelters; some will stand out in the open waiting for it to hit them on the head. Oters will keep listening to the news...
Then - "If anything, you almost begrudge the concept that someone might wish to pay out less per month on a static pile of bricks over the course of 25 years to, say, spend more on discretionary goods - what gives?"
BIIIIIIG words again. Probably picked this up completely off-cock - but here goes nothing.
Mate - I begrudge nothing. I simply see no sense in sitting in a rented shack; paying a Landlord's mortgage for them, laughing at everyone who is paying their own mortgage on a pile of masonry which might (BUT NEVER HAS) lose some of its original purchase value over a 25-year period - yet the shiny, sporty number on the drive costs four hundred and fifty quid a month in finance alone, and is worth 62% of what it cost a year and a half ago, and will be worth 20% less in a further 12 months!
Now if I were selling CARS, I would be looking at this through completely different spectacles, I freely admit. But I ain't - my life is dedicated to property so I fight the corner I know.
Helped? I hope so.
Back to you. Have you packed your bags yet - RR will no doubt be drawing up the Contract to sell you Hendry Towers tonight. If I were you, though - I'd request a lock-out agreement to make sure you're not outbid. At £140k, it will DEFINITELY be "highly sought-after" - Prestigous Turnings always are... ;0)
And keep the next round simple for old PeeBee, please...
As an aside PeeBee, i'm fascinated by your psychology as i've seen similiar utterances on a number of occasions:
"It simply fuels those that wish ill upon the market to jump up and down and get all excited thinking that next week they will get a three bed semi for nineteen bob and sixpence."
On previous occasions, you've admitted to be a 'free-market' adherent and that the market will do what the market will do. In this context, wouldn't such 'doom-mongers' be irrelevant in the greater scheme of things?
If anything, you almost begrudge the concept that someone might wish to pay out less per month on a static pile of bricks over the course of 25 years to, say, spend more on discretionary goods - what gives?
Thanks for going to the trouble to balance last weeks figures with previous years'. I must admit, I was surprised by the overall muted % although George Daws provided an interesting point '50% was always a good bench mark'.
For what it's worth, I was out by a fairly large amount. Although, as 2007 was the peak of the credit bubble it stood to reason that would see the highest %.
2009 - 55% (46% actual)
2008 - 50% (33% actual)
2007 - 65% (51% actual)
2006 - 70% (47% actual)
Henry: Me? Restrained? Darn it - I knew I didn't feel well this morning... ;0)
Sir - I have no beef with you. Never did have. What I have BIG beef with, is a load of stats which point to the market being well and truly shafted, when it is far from. It simply fuels those that wish ill upon the market to jump up and down and get all excited thinking that next week they will get a three bed semi for nineteen bob and sixpence.
This is my point. Take one example - and I won't make it the worst (best, dependent upon your stance...). 2003 - 1021000 on market 1/1/03. 2152381 properties listed, total 3173381. I'm with you there. Sold in year - 1526821, meaning that, as you say, 48% of homes listed and existing sold in that year. BUT THAT IS NOT THE CASE. on 1/1/04, there were only 1113000 available. There should, according to your figures, be 1646560. The rest - 533560 - are the withdrawals and "fictitious" properties you refer to. HALF A MILLION! Or, put another way, 32.4% of the availability, or put another way, making the total number of sales vs REAL properties on market 58%, not 48% as per your numbers.
2010 would, using the above, equate to 49% of REAL instructions falling through the sales funnel, not 41% as you suggest.
Of course, this is all number juggling. Hell - lets take out all the houses with decking in their gardens; those cursed with magnolia walls and beige carpets - get the figures up or down a bit more! ;0)
I sincerely appreciate your efforts to show us how the figures are arrived at. Personally, I prefer mine. Hope you don't mind.
What I WOULD propose, is that Agents who read this give us THEIR figures - NO PORKIES - just percentage of properties sold 2010, against instructions taken + instructions in hand 1/1/10. With and without withdrawals would also be interesting.
I wager the majority are WAY over 40% - otherwise they would be closed for business now...
Henry I don't think you have anything to fear from either Peebee or I. I suspect quietly we are all in the same game of guiding the industry onto a stable and steady path, a position that benefits the whole of UK society.
Our new government has an awful lot of social change to manage and the economic mess bequeathed by Messrs Blair and Brown is not helped by the collapse of Stamp duty, Tax and VAT revenues in a stagnant market.
Inflation is too low, interest rates are too low and there is no confidence in the market and so a malaise economy is created. Such an economy can only be treated by confidence.
Here is a classic example of tosh that will set off people like me. With no qualification at all here is the press simply confusing the public with words;
"Critics such as the Daily Mail inevitably criticised the 90% deal as “a return to the risky lending that saw it implode in 2007”.
What utter rubbish is that? It is a series of words strung together to make a sentence that simply ignores the past 30 years of boom /bust housing market where “normal” LTV mortgages were never considered a factor of price movements.
First time buyers need to work and save harder and perhaps modify their aspirations of living "In Town" and the Buy, Profit, Buy owners need to realise that their industry is oversubscribed and it is no longer possible to use property profit income in place of a 9-5:30 salaried job. Many of them will inevitably be the source of distressed sales that will help adjust the market.
Gosh, like a goat approaching two apparently sleeping lions, it is with some trepidation that I respond to these two individuals who often appear to take the sites name literally - EAT! :o)
'George' - My unaccountable profile is based on a desire in some quarters to balance the vast majority of property PR output which is generated by people with something to sell - by agents and by lenders. Not surprisingly their glass is always half full but the Press like balance and wish to be able to speak to the other 50% of any transaction - I'm conscious that this is Maths PeeBee :o) and inform buyers and prospective tenants of what might be going on.
I am fortunate in that I won't loose clients if I suggest that the market is anything but rosy. Like a cheery undertaker, no one likes to instruct a depressed estate agent and whilst there are many selling agents who privately agree with my occasional bearish view I understand why they can't say so in public. With an ego the size of mine it also means I have less competition so let's not try and change it!
'PeeBee'. I'm not sure I completely grasp your question but perhaps the numbers you are missing are those homes that are withdrawn during the year? As you know, many people only sell if they can get the house they are after and if they don't sell then they take them off, some are just testing the market and whisper it but dare I say there are a few which are completely fictitious and are just there to give certain agents a more impressive inventory!
I hope this helps. Thanks for the restraint and for the generous comments. Now I am off to do something about the Mullet which hasn't improved in the six years since the EAT mug shot was taken. Difficult of course to make a silk purse out of a sows ear - and I should know! www.bgfh.co.uk
Henry: Thank you for the time and trouble you have obviously gone to in order to collect this data.
Now I, looking at the stats. and simply plussing the instructions and minusing the sales, have identified somewhat large discrepencies year-on-year to the brought forward totals - a difference of 533650 in 2003-2004; 345138 from 2004-5 and so on; as high as 1132980 in 2008-2009, which was actually MORE than the b/f total, and MORE than the total number of instructions in the following year (1127288)!
To what do you attribute these figures? And how - if at all - do or should they affect the percentages of sales you quote?
I am not trying to poohpooh your hard work - just that I would like some clarification. In order for statistics to work, they surely need to be consisrtent - and a million or so out in one year alone is what I would argue to be a bit too much to be called acceptable error.
Respectfully yours, PeeBee - 'O'-Level Maths failure of '78. But only because I WANTED to fail... ;0)
Thank you Henry, now that you have removed asking prices and average property prices from the discussion it all makes sense.
Un-committed vendors have always been very big factor in the Instruction to sales ratio and historically 50% was always a good bench mark.
I took exception to your article last week for the single reason that it suggested the average vendor needs to drop £60,000 off their asking price to achieve a sale, I appreciate now that was not the intention but that is how it read. With other journalists reading and regurgitating what they have read from someone who is respected as an expert in the field, it is all too easy to convince less than committed vendors into withdrawing their properties. Chicken-Lickin Journalists are simply perpetuating the myth that the sky is falling down with respect to prices.
If you want to be in the press and on the Telly, good luck to you Henry. All I ask is that the message is clear. If the market is rising or falling explain the reasons why so that a generally intelligent public can make informed decisions.
There was a request for a final ill-judged insult as I scurry off into obscurity: Nice Mullet!