Sellers drop prices as market boom disappears reports Rightmove
The portal's new HPI shows that the number of vendors lowering the asking price doubles from last year.
Property sellers are reducing prices to achieve a sale as the market slows and buyers are hindered by rising mortgage rates, according to Rightmove.
The portal says the proportion of unsold properties seeing a price reduction has increased only slightly from the pre-pandemic 7.5% in October 2019 to 8% this October. But it has doubled from the figure of 4% in the booming market at the same time last year.
Buyer demand is still performing better than it was during the more normal market of 2019, but it is clear that we have returned to a much more price-sensitive housing market after two years of a buying frenzy, Rightmove says as it releases its latest House Price Index.
Rip-up rule book
During the market boom many agents said that they had to rip up the rule-book on valuing properties due to bidding wars, Rightmove says, but now they’re back in more familiar territory, and pricing right first time is even more critical to securing a quick sale.
“The frenzied market of the past two years has turned into a more normal market”
Tim Bannister, Rightmove’s director of property science, says: “The frenzied market of the past two years has turned into a more normal market more abruptly and less smoothly than we were expecting.
“It’s important to note that there isn’t a glut of unsold properties, and the average number of enquirers for the low number of available properties for sale is still over a third higher than it was back in October 2019, which is helping to prevent any price falls by more than is usual at this time of year.”
There isn’t a glut of unsold properties, yet! History tells us there is a high chance that there will be. Whether that happens or not, is in the hands of agents. Get it wrong now and the downturn will go deeper and last longer than it needs to. Here’s how you can ‘get it wrong’.
1) Bury your head in the sand. Pretend it’s not happening. Try to convince your vendors and buyers that it’s a blip caused by the seasonal market.
2) Accept instructions from vendors who want to ‘test the market’ especially when they have no real motivation to move. Those will make it appear that there is an over-supply when the only actual over-supply would comprise ridiculously-priced homes.
3) Add X% to the expected sale price in anticipation that there will be offers. Nuts!
4) Not taking control – not speaking to current vendors where you might have been too ambitious when recommending their current asking price. Easily done if you thought the market might only have blipped temporarily a month or three ago. The longer you wait, the more the market will slide, and the worse it will be for them. If you don’t grab the bull by the horns, you will likely lose the instruction to another agent who will reduce the price and sell it. Your money will have been wasted. Your ego dented.
5) Not being totally honest with vendors AND buyers. Deals will be done with both, just not at the same prices you’d have achieved a few months ago. This needs to be explained. Stocks and shares go up and down in value – so does property. Each time, the pendulum swings, it tends to swing harder in the opposite direction.
6) Not having a narrative that explains how for someone in a steady job and not intending to move for a while, it could easily work out cheaper to buy with a 5-year fixed mortgage than pay more in rent that could easily increase each year – rent benefits someone else’s investment. For someone moving up-market, reducing prices is great news – remind them that they’ll get less for their homes but they’ll be paying less+ for whatever they buy.
7) Not taking a step back and looking at all that is happening dispassionately and instead going into panic mode. A declining market is not the end of the world except there will be challenges for those in negative equity and desperate to sell. Do your very best to help those people if you can. They’ll need friendly advice.
This is a time for the best agents to stand out and thrive.