Strongest August market since credit crunch as sellers stay away
Seasonal August price fall more muted than usual, with price of property coming to market down by just 0.8% (-£2,258) compared to post-credit-crunch average August fall of 1.5%1: They cannot find anywhere they want to buy
2: The costs of moving
3: They cannot find a property they can afford
The strongest August price performance since 2007 demonstrates the continuing supply/demand imbalance in the property market. The price of property coming to market is down by just 0.8%, bucking the eight-year post-credit-crunch trend of larger summer holiday price decreases, with the average August price change between 2008 and 2014 being a fall of 1.5%.
Miles Shipside, Rightmove director and housing market analyst comments:
“While new seller asking prices have been muted by the traditional summer holiday property slowdown, the underlying shortage of property coming to market compared to buyer demand has helped to deliver the strongest August price performance since before the credit crunch. Buyers can normally pick up some bargains in August as sellers who are marketing their homes when they should be holidaying often have a pressing need to sell and mark their prices down pretty aggressively. At 0.8% down on the previous month, this is the least generous that sellers have had to be for eight years and a clear sign of upwards price pressure in the pipeline.”
Rightmove advertises the property for sale for nearly every estate agent in England and Wales, and our year-on-year statistics show that the number of properties coming to market this month compared to the same period in 2014 is down by 8%. A factor in this is the lack of new-build supply over the last twenty years, exacerbated by current new home volumes still being well below the levels reached just before the credit crunch. The historic new-build shortfall results in there being a smaller overall housing stock available to come to market, while the current new-build shortfall also limits the number of existing property owners who are looking to sell their house in order to buy the limited number of suitable brand new homes available.
Shipside observes:
“The shortage of suitable property being built exacerbates the vicious circle of not enough property on the market to meet demand, increasing prices, and a reluctance among home-owners to come to market if they think the prospects of finding and funding their next move are severely compromised. These stay-away sellers who are seriously considering a move but have yet to put things into motion have concerns around a shortage of choice and stretched affordability. They could be helping to get the country’s limited property stock circulating, but they have concerns about coming to market, deepening the supply shortages affecting many areas.”
Rightmove research among home-owners who are seriously considering a move establishes their top three reasons for not yet putting it into motion:
1: They cannot find anywhere they want to buy
This was the most commonly cited view, and with home-owners being reluctant to put their own property on the market speculatively and wait for the right property to become available, some high-demand locations can suffer from property gridlock.
Shipside advises:
“If there’s very little up for sale it can often put off would-be sellers from deciding to market their own property. Selling subject to contract before you try to buy sounds concerning to many, but with fewer properties for sale you need to have a buyer for your property or you will be treated as a less serious buyer yourself. If you’ve sold your property subject to contract but cannot find the right home for you, you can delay the deal with your buyer until it comes along. If nothing suitable does comes along and you lose your buyer then the worst outcome is that you have to find another buyer or take your property off the market and stay put for now. Be mindful that you could be wasting a buyer’s time, so be very open at the outset that you have not yet found a property to buy, and they must not commit to any costs until you have agreed your onward purchase. If you’re in an area where suitable stock is tight, then discuss these tactics and their implications with your estate agent.”
2: The costs of moving
With lenders requiring substantial deposits and better mortgage rates available to those who are borrowing a smaller proportion of the purchase price, the costs of moving can eat into buyers’ potential deposits meaning some owners may stay put or improve their own home instead. Whether moving or improving, thorough research and getting advice from property professionals to fulfil the maximum potential and value of your property is very important, especially if the next move is trading up to a more expensive property. It is a good selling market in many parts of the country, but the key is selling to the right buyer at the right price, and if buying again tying it in with the right purchase.
Shipside comments:
“Some would-be sellers are reluctant to come to market, but with the right advice and tactics, plus some very attractive fixed rate mortgage offers, these are good moving conditions. It’s a big financial decision to move though the changes in stamp duty have reduced the costs of moving for the vast majority. The various fees including estate agents, conveyancing, arranging a mortgage, stamp duty and removals all add up and mean that some postpone, refit or extend. When considering selling getting professional advice from your local estate agent is essential, not only on how to prepare your property for sale, but also expertly marketing its benefits to achieve its full value and help cover the costs of moving.”
3: They cannot find a property that they can afford
The shortage of property for sale in many popular locations puts upwards pressure on prices, is not good for affordability ratios and typically hits those buying again if they are trading up.
“There’s been considerable publicity about tighter lending criteria, and some would-be movers are perhaps assuming that they will not qualify,” comments Shipside. “With some really tempting mortgage deals around, it seems that lenders have a renewed appetite to lend, so it’s worth chatting to a mortgage advisor. Widening your search criteria to include cheaper and potentially up-and-coming areas is often also a rewarding tactic.”
