Miles Shipside, director of Rightmove, comments: “The ‘double-dippers’ will be able to point to a clear downward trend, with new sellers dropping their asking prices for three months on the bounce. They can cite tough competition amongst sellers and agents struggling to find proceedable buyers for their record levels of unsold stock. Conversely, we are also recording the lowest weekly run-rate of fresh sellers since April. This will give some ammunition to those forecasting a flatter price trajectory as it could be an early sign of fresh supply beginning to wane. However, whether you think we are bumping along the bottom of a U-shaped recovery or are about to double-dip into a W, your property will need to tick all the right boxes to sell this autumn”.
September’s fall of 1.1%, following on from the reverses of 0.6% and 1.7% recorded in July and August, means that new sellers are asking £8,016 less than those that came to market in June. Nearly half the 7% gains in asking prices seen in the first half of 2010 have been wiped out by recent falls and, with the less active months of November and December ahead, national average asking prices are on course to end the year where they started. Where they go from there depends on the ongoing balance between supply and demand.
There has been a slight easing of fresh supply this month. An average of 26,087 properties a week came on to the market in September, the lowest weekly run-rate since April. This is also down 11% on the 29,220 recorded in our August index. The easing of new seller numbers could be attributed to one or a combination of the following reasons: 1 - The pent-up backlog of more speculative potential sellers that was bottled up by the costs and legal necessity to obtain a Home Information Pack (HIP) has now worked through the system. 2 - A number of owner-occupiers who would traditionally try a pre-Christmas move have altered their strategy. This could be a decision influenced by deteriorating finances and sentiment. 3 - Interest rates are low enough for those home-owners on the borderline of financial-breaking point to avoid swelling the ranks of forced sellers, alleviating further downward price pressure
Shipside adds: “The post-HIP party may have finished, but the surge of extra stock has left the market with a real supply hangover and falling prices as a consequence. The suspension of HIPs coincided with the ongoing mortgage famine and the start of the traditionally quieter summer market. We could be seeing the start of a new norm, with the number of new properties to the market curtailed by more sober potential sellers unwilling or unable to come to market in this phase of the economic recovery. The option to try for a speculative sale will not be on the menu for many as tax rises and fiscal savings make it more challenging to live within their means ”.
The net result of fewer new sellers is that after six consecutive rises, average unsold property per estate agency branch has stabilized at 79. This is still equal to the record high recorded by Rightmove last month, so competition for buyers is still intense in all but the most popular locations. It compares to an average of 69 at the same time last year, when stock shortages in some parts of the country helped underpin prices.
Shipside comments: “Sellers’ attempts to hold onto price gains made earlier in the year have suffered from a relentless stream of fresh property coming to market, so a small break in the level of new competition will come as some relief. However, rather than relax they should look to make the most of it to sell in the pre-Christmas window, especially as it may prove to be only temporary respite. Mortgage-ready buyers may have slightly less of an upper hand this month, but they are still clear favourites in the negotiation arm wrestle”.
Previously stock-starved estate agents report that their focus has now switched from stock building to stock management. While still keen to attract new strongly motivated sellers, their goal will be to motivate their existing vendors to turn potential sales into actual sales. Getting prices of their properties lower than those of their competitor estate agents will help them attract more buyers. In turn that sales success in a tough market will create a virtuous circle of attracting more business from others who are keen, but just as importantly motivated, to sell.
Shipside adds: “Success breeds success, and if a seller is keen to sell they will be watching out for the local agent who can buck the tough market trend. For those sellers who want to try and be out before Christmas, the ‘3 P’s’ of Price, Presentation and Promotion are absolutely critical. You have to be the best priced home that a buyer can find, and be spruced up to sell. If you have both of those going for you, then make sure your agent promotes it to the best of their ability. You need the hat-trick of all 3 P’s if you are to be enjoying your Christmas turkey in your new home”.