September has been and gone and our prediction that it would be extremely busy was (sort of) correct. To an extent anyway. So, what are the key facts from Hatched?
- Viewings are up by 9% compared to August. This doesn’t sound much, but when you consider viewing activity only rose by 2% between the start of June and the end of August, you can see this is quite a big rise.
- Instructions (new houses on the market) rose by 10% compared to August, but again, this was in contrast to a rise of just 3% between June & August inclusive. So there is activity…
- For the key stat however - sales agreed – they were up, but only 5% compared to August. With an increase in instructions and viewings, we would have expected this to be up by a good 10%, if not more, with it being September.
So, the question is: Why haven’t sales increased in line with new instructions and viewings?
In August, everyone put it down to the Olympics. In July, everyone put it down to the weather and the start of the Olympics. And in June, everyone put it down to the Queen’s Jubilee (and the weather!) But maybe it’s time for the ‘experts’ to stop making these excuses and start thinking about what the real reason might be. So, that’s exactly what we are going to do; we think the reason is simply down to pricing of properties and the competition that is out there at the moment.
With the market still just ‘bouncing along the bottom’, what’s happened since the start of the year is properties have been ‘backing up’. What we mean by this, is that the properties that came on the market in January, February and March, that haven’t sold, are still sitting on the market, rather than sellers ‘giving up’, because they have been given the promise by their agent that ‘next month will be better’.
Along with these, we had the perceived increase in activity over this period of time, which encouraged more new sellers to put their houses on the market between March & June (We had our best month ever for new instructions in May). And then with the increased level of instructions throughout the market, this has all lead to an awful lot of houses just sitting on the market, giving buyers a lot of choice.
As with any market it in the world, pricing is dictated by supply and demand.
With lots of houses on the market, this means that supply is high, with demand still being at a similar level all year (even though our viewing levels have increased in September, I hear you say!). But all of this means, that only the houses that are offering the very best value for money, are selling.
Buyers are also very well educated in a few things. Firstly, the internet has a lot to answer for (Not least, agents like us, as (some) high street agents would say!), with all the information you can get online about ‘valuations’ and what people paid for their property (this is such a frustrating thing for estate agents and sellers, because the ‘valuation tool’ doesn’t have a clue what work has been done to the property, but that’s another blog altogether!). Secondly, buyers are not stretching themselves, for obvious reasons. And thirdly, buyers don’t want to get stung like they did in 2007 – they want to buy somewhere, but they don’t want to find that what they buy is worth less than they paid for it. So, maybe we have just got to a stage, where buyers have decided that all of the above factors, have started leading to a more cautious approach from buyers, who were much braver in March, April & May this year.
We certainly don’t think there is any sort of crash on its way. We just feel that sellers of houses need to be very sensible and completely objective about what their house is worth. And then, they need to price their house competitively and make it the most attractively priced house compared to all the others that they are competing with.
I sounds simple. And it is to be honest. There are buyers out there, and there are plenty of houses out there as well. So, there is the potential for a really healthy market. Unfortunately, we think it requires the sellers to make the first move to create that healthy market - by bringing their prices down...