Asking prices jump by 3.5%
October saw a 3.5% (+£8,310) jump in new seller average asking prices, the biggest increase for eight months. This goes a long way towards reversing the Olympic-induced price lull over the summer, which saw asking prices of property coming to market fall by 4.6% (-£11,377) over the three months between June and September. This price rebound indicates the market is not performing as badly as some feared.
However, sellers looking to try for a higher price should note Rightmove research which finds that fewer than two in five potential buyers state that they would actually arrange to visit a property if they consider it to ‘match their criteria but be over-priced’.
Miles Shipside, director and housing market analyst at Rightmove comments:
“This month’s jump of more than £8,000 in asking prices is partly an anticipated bounce after the Olympic-induced activity doldrums, though with all regions seeing increases it also provides evidence of some life in the market. The prospect of a few active selling weeks before the winter slowdown means estate agents are keen to attract fresh stock to try and land more buyers. However, this stock-building could backfire if they agree to over-ambitious pricing to please a seller, as it could curb a potential buyer’s enthusiasm to arrange a viewing if the over-priced alarm bell starts ringing.”
The upturn in asking prices, in the absence of other positive influences, is most likely attributable to the continued shortage of new property supply. The weekly run-rate of fresh property stock this month is down by 0.4% on the same period a year ago, indicating little change in sellers’ willingness or ability to come to market. Estate agents are also experiencing a squeeze in average unsold stock per estate agency branch. This figure now stands at 72 properties, a near 10% reduction compared to the 78 recorded a year ago, and much of that stock is “stuck” on the market at prices that render it effectively un-saleable.
“After a summer of sporting distractions, optimists may consider lower unsold stock levels and strong pricing to be signs of recovery. However, sellers still need to be mindful that the window of opportunity to sell before the traditional winter slowdown is a narrow one, and they risk being left out in the cold for months until the spring market thaw. In addition, estate agents are reporting that mortgages are still no easier to obtain, with risk-averse lenders nit-picking every detail of the mortgage application paperwork, even from buyers who seem squeaky clean.”
Rightmove have found that only 38% of buyers would actually make the effort to view a property they consider to be ‘over-priced’. The remaining 62% stated that they would not initially arrange a viewing inspection even if they considered the property met all their search criteria.
“If the first impression of a property gives a buyer cause to hesitate, you often don’t get a second chance. If your property has all the right ingredients to attract a buyer, but they consider the price to be over-cooked, you may fail to give them a proper taste of what your property has to offer. Many buyers make their property decision from the outside looking in, and anything that deters them from being tempted inside means they could boycott your property in favour of one they immediately judge to offer better value. Pricing high with a view to negotiating down can work in a market where buyers are less price-sensitive. But remember our research also shows that properties in the upper price quartiles have performed best since the onset of this economic downturn. In addition, most property values are still below previous peaks, so some sellers may need to price more keenly to be a more compelling buy.”