If you pay any attention to the local housing market (and I reckon you do) you’ve more than likely noticed that stuff isn’t selling like it was a couple of years ago.
Where once I could guarantee a For Sale board round here wouldn’t last two weeks it’s now not unusual to see more price reductions in Rightmove’s daily emails than new listings. Prices are clearly on the slide. It’s impossible to argue otherwise.
But prices aren’t actually on the slide.
Except they are.
But they aren’t.
When estate agents value a property we look at various things to gauge where we think the price should sit, the most important one being comparable evidence. We look at what similar properties have been selling at recently and how they compare to the subject property. If one a bit smaller sold at Â£380,000 and one a bit bigger at Â£420,000 then it’s pretty straight forward to work out that Â£400,000 will probably be about right. Easy peasy lemon squeezy. But what if the last two sold nine months ago? What then? Well that’s pimps too, the market’s been going up around 8% or so for the last 7 years, so you add a bit for that elapsed 9 months, maybe 6%, and ask Â£425,000. Lovely job.
And for the last six-and-a-half years that’s worked a treat.
But now it doesn’t.
If something was £400,000 nine months ago and you ask £425,000 now it’s highly likely you won’t sell it. Until you reduce the price to Â£400,000.
But when you do it will fly out. It might even sneak up to £410,000 in the process.
Reduce the price £25,000 and the house will sell. So prices have dropped then?
Yep. ASKING prices have indeed dropped. But actual prices, selling prices, probably haven’t. You see, that house never really was £425,000, it was always £400,000, we just got it wrong by assuming a rise that wasn’t there. It’s taken us a few months to accept it fully, but now we do and everything’s back on track again.
At the time I write this, of the 10 most recent properties we’ve agreed sales on, 7 were at the asking price and 3 were a bit over, just like the old days. Of those 7 three had been reduced in price but all three were older listings, from before we’d fully grasped this brave new post-referendum, post-stamp-duty-hike world. To put it bluntly, those listings that were overpriced at the off. I don’t necessarily make any apologies for that, we always do our best to get things right and we were simply applying the same formula that had worked brilliantly since before Kate and Wills got married.
They were happier times, weren’t they? The early 2010s. A lovely royal wedding. People running and jumping and throwing stuff in London. A French bike race starting in Cambridge. Life was splendid. And now what? A level housing market. That’s no good at all, is it? Unless you’re a buyer…