Summer sellers need to work harder as prices stand still
- New seller asking prices hit usual summer slowdown this month resulting in virtual price standstill (-0.1% or -£248)
- Number of properties coming to market jumps up by 8.6% compared to same month last year, but no corresponding increase in buyer numbers to soak up new seller influx (sales agreed holding steady at -0.2% compared to the same month a year ago)
- Stock for sale per agent highest since September 2015, meaning sellers in areas of over-supply need to compete harder on price, presentation and promotion of their property to attract buyers
- The proportion of sellers already on the market that are reducing their asking prices is the highest at this time of year since 2011, indicating initial over-optimism on price
The price of property coming to market this month is at a virtual standstill, just 0.1% (-£248) cheaper than last month, partly due to the usual summer slowdown. However, finding a buyer this summer is made more difficult by an 8.6% increase in new seller numbers this month versus the same period last year. Sales agreed by estate agents are virtually flat (-0.2%) against the same month in 2017, so in areas of over-supply sellers are going to have to work harder to attract a buyer.
Miles Shipside, Rightmove director and housing market analyst comments: “At this time of year many potential sellers are more focused on erecting sun umbrellas as opposed to ‘For Sale’ signs, and would-be buyers are equally distracted by their summer holidays. So while an increase in seller numbers is a welcome sign of more liquidity in a generally stock-starved market, it has unfortunately come at a quieter time of year. Prospective buyers will need tempting with a summer special price or a beautifully finished and presented must-have home, and sellers whose homes tick these boxes then need an estate agent with good marketing skills to promote it effectively.”
The growth in new seller numbers and the flat level of sales agreed numbers have resulted in an increase in total stock per estate agency branch. Nationally the average is 52 properties per branch, the highest level since September 2015. This is another indicator of increased seller competition, with more sellers searching for a buyer and buyers having more property choice.
Shipside observes: “The number of sales being agreed by estate agents is consistent with the same month in 2017 and is holding up well considering the uncertain political background and stretched buyer affordability. In fact, there are signs that activity is improving as the year progresses with sales agreed year-to-date now down just 3.9%, compared to 5.4% that we reported back in May. Most regions in the middle and north of Britain have brisk market conditions where buyers eagerly soak up extra supply of suitable property coming to market, and where there is enough momentum to support an increase in prices. With less momentum further south, any increase in property coming to market often leads to more property choice and gives buyers more negotiating power. Whilst stock levels are very limited in the brisker market locations, from a national average perspective as we enter the summer holiday period the total stock per estate agency branch is at the highest level for nearly three years.”
Rightmove research shows that having a competitive and realistic asking price from the beginning helps to attract immediate buyer interest and increase the chance of an earlier sale. For those homes not selling, reducing the asking price of their property is a common tactic. There are a third of properties currently on the market that have been reduced at least once since they first came on to Rightmove, which is the highest at this time of year since 2011.
Shipside advises: “A reduction in asking price is often a sign of initial over-pricing by estate agents and sellers, and whilst a price cut can boost buyer interest you have to overcome the negativity that arises when a property has not been snapped up quickly. Our research shows a much increased chance of a quick sale if priced sensibly at the outset, and in contrast if over-priced initially it often means a price reduction to a lower level than if it had been more accurately priced from the beginning. It can also be a sign of a falling market, where the gap between asking prices and what buyers are now willing to pay has grown. With more price reductions at this time of year than in any of the last six years, there is likely to be a combination of both initial over-pricing and failure to react fast enough or reduce by enough when initial buyer interest fails to lead to a sale.”
Estate Agent’s View
Nick Leeming, Chairman of Jackson-Stops, comments: “Whilst it is the norm to see more sellers coming onto the market at this time of year there has undeniably been a stronger bounce in May and June this year as many home – owners held off listing their properties due to the unseasonably cold weather in March and April. An increase in the number of properties for sale will have to be matched by a corresponding increase in buyer demand if vendors are to avoid reducing guide prices to secure a sale. The market is finely balanced at the moment and the latest political uncertainties over Brexit will do little to help build confidence.”
First-time buyers benefit most with largest annual price reduction
- Price of property coming to market in London down by 0.5% (-£3,279) this month, partly due to the usual summer slowdown • Average asking prices down by 1.7% compared to a year ago (-£11,040)
- Property with two bedrooms and fewer -the sector often favoured by first-time buyers -sees largest percentage price reduction in last 12 months, dropping by 3.5% or nearly £18,000
- Middle sector (all three bedroom and four bedroom excluding detached) sees rise of 0.2% and top sector (four bedroom detached and five bedroom or more) falls by 2.7%
London’s property market continues to re-adjust, with an overall fall of 0.5% (-£3,279) in the price of property coming to market this month. The price fall reflects new sellers recognising that it’s the onset of the summer holiday season, and pricing more competitively to attract potential buyers who are distracted by their holiday plans.
Miles Shipside, Rightmove director and housing market analyst comments: “Sellers are usually reluctant to come to market in the summer holiday season as they focus on packing sun-gear rather than packing away their clutter, and erecting sun umbrellas as opposed to ‘For Sale’ signs. Those who do come to market will often have a more pressing need to sell, and as part of choosing to market now they also choose to price cheaper than other sellers already on the market.”
The price of property coming to the market in the capital is now 1.7% (-£11,040) cheaper than it was a year ago, the largest year-on-year fall since the 3.5% seen in January of this year. While the 1.7% annual fall is an average across all property types, the sector that has recorded the largest percentage drop in new seller asking prices is the lower market sector. This is made up of properties with two bedrooms or fewer, the sector where first-time buyers are most active. These properties are an average of 3.5% cheaper compared to a year ago, dropping by nearly £18,000 from £504,131 to £486,371. This is in contrast to the middle-market sector (all three bedrooms and four bedrooms excluding detached) which sees an average rise of 0.2%, up from £706,805 to £708,019. The top-of-the-ladder sector (four bedroom detached and all five bedroom or more) falls by 2.7%, down from £1,400,451 to £1,362,252.
Shipside observes: “With the lowest-priced property sector having the largest percentage reduction, this means that aspiring first-time buyers are among the greatest potential beneficiaries of the downwards adjustment in asking prices by London’s sellers over the last 12 months. While the travails and price reductions in the most expensive sector of the market are well documented, their percentage falls in new seller asking prices over the last 12 months are now less than those in the lowest – priced sector. It’s been well documented that the top end of the London market has been struggling for the past couple of years, but new seller asking prices in the lowest priced sector are now experiencing a larger percentage fall than these high – end properties. The most expensive sector still has the largest falls in cash terms, but the average fall of around £18,000 in the cheapest sector is a welcome benefit to affordability – stretched buyers. It’s hard to know if prices will fall back much further, though traditionally prices are weakest in the summer holiday period and the winter season, so buyers who miss the opportunity to source a good deal this summer might have to wait a few months for their next chance at a potential bargain.”
Transport for London zones
Borough data is now based on a three month rolling average and can be used as an indicator of overall price trends in each borough over time. It is not directly comparable with the overall London monthly figures.