Vendors Driving up Prices by Holding Back Flood Gates
Tuesday, October 20, 2009 by Douglas And Gordon
Commentary by Ivor Dickinson, Managing Director of Douglas & Gordon
Vendors are driving up prices in London by holding back the flood gates and not putting their properties on the market. Nobody wanted to sell when the market was falling, and now seven months of consistent price increases has given sellers the feel good factor, so they are still not moving, thereby fuelling pent up demand.
Although many sellers are being tempted back into the market, they are not taking the plunge just yet. In September, we carried out twice as many valuations, but instruction levels are down 50% compared to this time last year.
The tipping point will come when prices are generally perceived to be back to 2007 levels and people are no longer at risk of being in negative equity. That’s when we can expect an avalanche of stock onto the market and prices could potentially fall. However, this is unlikely to happen until the next election, as people are waiting to see what happens then.
Why wait for the potential double dip next year when you could benefit from the buoyancy in the current market? Sell now while you have the choice, not when you are forced to if rates go up. If your property is blighted in any way you are better off selling in a market where there is a dramatic lack of stock. Rents are still lower than a year ago which could offer a good stop gap before buying again when the market corrects itself.