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Henry Pryor blog - 20/10/10

20 October 2010

In its latest survey, the Halifax reported that house prices had fallen 3.6% in September. Days later, on Monday, Rightmove says that asking prices rose 3.1%. What is going on?

I have a dream. In it, I find the unclaimed Euro-millions ticket, Stevenage Borough win the FA Cup, my pigs win prizes at the Herts show and Patsy Kensit agrees to one last roll of the dice!

Sadly, like these optimistic home owners who put their properties up for sale last month, there is a deal of difference between what one dreams of and what actually happens. In my case, I suspect that Pat Butcher is a more likely result!

Every October it’s the same. People have a good summer and come back from holiday to put their house up for sale, in most years asking 3%-plus more than those who launched over the summer.

With the 105,769 properties that Rightmove.co.uk listed last month, each seller typically wanted £7,000 more than the average seller had asked for the property the previous month, which is crackers.

Aspiration is a fine thing, but the sad fact is that of the 105,000 homes that came on the market, only 9,000 of their optimistic owners will find a buyer in the next month, leaving roughly 92% wondering what they should do next.

Rightmove’s own numbers suggest that inquiries for a property fall by over 50% after the first week, so getting the price right in the first place is essential.

Estate agents are partly to blame. Not all are tough enough with their advice and some are prepared to win an over-priced property in the knowledge that eventually the guide will come down and that it should sell. The truth is that at current rates, even if you left the property on the market for a year, it has less than a 50% chance of selling.

Vendors in London were even greedier, with the average asking price rising 5% in the capital last month. Low levels of supply offered some justification for this, but since volumes of new properties are up 34% over the year, this argument is now wearing thin.

What sellers and agents have to appreciate is that buyers are now in the driving seat. Marketing a property with an over-ambitious guide price just makes everyone look foolish – particularly when you come to reduce it, as 30% of sellers did over the summer.

The internet has made the marketplace more transparent and buyers can see for themselves what is really happening. Values of any asset are based on what they sell for – not what the owner is asking.

Yet agents often hear that “so-and-so is asking X for his house, so mine must be worth the same”.

The fact is that his isn’t, so neither is theirs!

Comments

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    AceOfSpades: Awww, shucks - I'm blushing! Cheers, mate ;0)

    • 21 October 2010 17:23 PM
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    You're way out of touch, George. Leg warmers and mulletts are definitely not cool 'right now'... Not too late to by a new wardrobe and get a hair cut though.

    As for PeeBee's blog, it would certainly be a balanced, accurate view with a welcome hint of common sense. Don't rule it out just yet.

    • 21 October 2010 16:37 PM
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    Hear, hear! (I was only joking about the blog thing anyway... ). A wise(r) old(er) stick once told me "Engage brain before opening mouth". Pity that few relate this mantra to bashing out sho!te on a keyboard, then pressing 'enter'... ;0)

    • 21 October 2010 15:49 PM
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    Publishing a blog is like having a Mullett and wearing leg warmers. A really cool thing to do right now but give it 5 years when history is bound to make one look a prat and one will be wishing the whole fad hadn't happened.
    Take old matey who reckons we ought to be be legally forced to buy our un-sold stock after 3 months.
    Blogging is simply inviting embarrassment and the fact it can't be deleted or removed means it will be there forever. An indelible record of guff!

    • 21 October 2010 14:06 PM
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    George - as Meat Loaf would say... two out of three ain't bad...! I am sure that some would argue that I am vastly overqualified in all three KPA's... ;0)

    • 21 October 2010 12:28 PM
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    Don't bother with the blog mate unless you have an inflated ego, time to waste and are daft enough to think that anyone really gives a stuff what you write.
    Blogs appear to contain very little meaningful content and are often nothing more than cerebral regurgitations.

    • 21 October 2010 11:39 AM
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    Okay - enough... PLEASE! One swallow does NOT a summer make; likewise one flake of snow is not a guarantee of a blizzard.

    Allow me to show you how to sh@g the figures one way or another...

    A quick search on Rightmove shows me that there are 29 properties in London listed at £50MILLION or more. Actually, there's about three - but one of them is listed by every man and his dog...

    SO - let's assume that they ALL came to the market in the last month. That's £1.45BILLION added to the Rightmove pot, for what appears to three possible sales opportunities! To save you all doing the maths, if you divide the above amount by the number of RM instructions, this is an average of £13,709 per unit - almost TWICE the reported increase.

    Now I'm not saying that this did actually happen - but it's a possibility. One property wouldn't normally affect an average - but it all depends of course on the numbers which make up the sample.

    Maybe I'll start a blog... ;0)

    • 20 October 2010 10:45 AM
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