Forget house prices, the REAL story is asking prices being too high

Tuesday, June 07, 2011 by Ed Mead

Halifax figures on house prices are out today and point unsurprisingly to a meandering national market plagued by low volumes and draconian lending. Seems mildly ironic that a lending institution should be producing such stats, perhaps they should add “SORRY”.

But the biggest problem in London is not house prices, its ASKING prices, which are being driven by an unholy trinity; desperate agents, over ambitious sellers, and the mistaken perception that the good times are here again.

The real bellwethers of the economy are property buyers. Clearly if they’re not spending the chances are they won’t be spending elsewhere, but we as agents know when they’re drawing their horns in, and they are drawing them in. They’re not disappearing but simply telling us that they think things have gone too far. A quick check of most web databases shows that more than half properties are now showing some kind of price reduction. Many are wimpy ones designed to keep sellers happy and do not produce tangible benefits, but where agents and sellers are deciding to actually bring a property into the range of a load of new buyers suddenly they’re seeing action. It’s what buyers are waiting for.

Out of D&G’s 18 offices almost all at a management meeting last week felt the same.

 

Traditionally when such changes occur it takes c. 3 months for sellers to twig that they have to alter their perception, but the issue here is that because agents are so desperate for business they’re going to be badgering a seller when they see that a property isn’t selling with the instructed agent. If you’re a seller and an agent is ringing you daily what are you going to do, reduce the price or give the new agent a chance at the same price. Chances are you will stay at same price and waste even more time.

So it seems that the usual three month hiatus is perhaps lasting a little longer, but it does perhaps point to Autumn being a lot busier than the summer so long as the average asking price drops by between 5 and 10%.