As predicted, the market is calming, though not dropping.
It’s important to read beyond headlines to see the full picture, so while the news may report a drop in prices what they actually mean is that the rise in property prices has reduced. So prices are still rising, though slightly less than before.
There is a combination of factors at play here:
- There’s still demand from buyers wanting a change of lifestyle, be that upsizing, relocating and/or downsizing
- Demand still outstrips supply
A significant number of people have moved house in the last two years in order to change lifestyle. This is in addition to the usual factors that drive a house move; marriage, birth, divorce, death. The number of those moving for a change of lifestyle has been far above normal rates which has driven price rises. This level of activity won’t continue at recent levels though it is still a factor, along with the ongoing motivators as above.
So what does this mean? Let’s consider that the bottom end of the market is a significant driver for prices and volume of sales, and sub £500,000 homes have been flying off the market. So, for example, if Betty two doors down listed her house at £500,000 in February and sold for £550,000 this acceleration in price was due to lack of supply and strong demand. If Doris two doors down decides to list her property now, asking for £600,000 based on Betty’s selling price of £550,000 plus price growth, she may be disappointed. With less demand Doris will likely sell for closer to £550,000 (above or below).
If a property isn’t selling it’s either down to marketing or price. Assuming the marketing is right (it often isn’t – in which case change agent!) it’s likely price. The market will tell us the appropriate price for a property, so if the interest isn’t there the property is likely priced too high. These adjustments in perception of value on behalf of sellers will calibrate in the next few months – by that I mean sellers who really want to sell will review prices as opposed to those who are chancing their luck and will withdraw from the market when they don’t achieve their launch price.
We must be mindful of wider economic influences, specifically the rise in the cost of petrol and electricity plus the knock-on effect to the prices of, well everything. This will create a squeeze which will inevitably impact affordability for buyers, especially at the lower end of the market which largely drives activity.
Therefore, it’s important for sellers to look at where we are right now when pricing their property. The market is still strong and rising, though perhaps at a calmer level.
To discuss the sale of your home, feel free to call me anytime.
Founder & Director
Kai Carter Estates