Date Published 11 November 2008
The downward trend in asking prices continues, with new sellers now marketing at 4.9% less than 12 months ago, the largest year-on-year fall ever recorded by Rightmove. At the same time, `property vultures` are circling, looking harder and longer for a good deal. Old habits associated with ten years of a rising market remain however despite a severe downturn in property sales volumes. New sellers increased their asking prices by 1% compared to last month, though the price rise was far less pronounced than the October norm of circa 2% seen in more buoyant years. This continued the traditional of an autumn bounce in asking prices as, in spite of financial mayhem, some sellers are tempted to think their own residence is more desirable than its competition. Estate agents are also competing for scarce additional stock on the off chance it will sell and boost revenues before Christmas. However, all should note that for the first time, this month sees all regions of the country slipping into negative territory compared to a year ago.
Any potential buyer will drive a hard bargain, so the temptation for sellers to price up and negotiate later may seem like a good idea. These are not the tactics of sellers in real financial hardship, and it would appear that the economic downturn has yet to become an everyday reality to most people. This is about to change as, unfortunately it looks like rising unemployment and an increasing pipeline of repossessions will drastically alter the complexion of the market in 2009.
For now, we continue to see evidence of the lack of urgency for sellers to enter the market resulting in average unsold stock per estate agent decreasing from 78 to 76. These levels still remain at historic highs, a testament to the lack of buyer activity as well as sellers being unwilling to accept a price in line with those few deals that are being achieved. Sellers should be mindful that rapidly rising unemployment is historically linked to a surge in forced sales, driving prices down further.
While fewer buyers may be ready to proceed, a number of `property vultures` are looking harder and longer for the right deal. Prospective home movers researching the market now spend an average of 13 minutes per visit to the site. During searches, sellers who price too high are easy to ignore and in danger of missing the impact a new listing generates. Once initial momentum is wasted, their fate tends to be a downward spiral of price reductions and a growing suspicion among would-be buyers that the property lacks appeal and popularity.
For those who have been active in the housing market in the last 20 years, or were now hoping to get on the housing ladder following recent price falls, the rules have changed for good. When we look back on these turbulent times, I suspect we will not only realise that we came closer to the brink than most imagine, but we will also clearly recognise it as the end of the long period of growth in owner occupation.`