As predicted, the market is calming – not dropping but calming. This is no wonder – beyond the usual drivers of births, divorce, death and relocation the last two years have seen a significant number of people moving for a change of lifestyle at a rate that was always going to wane.
Ongoing market drivers
That said there is still a backlog of buyers in addition to the usual movers listed above:
- Those who sold and went into rented accommodation, waiting for the right property to buy
- Those waiting for the market to calm, to avoid a bidding war
- Downsizers concerned about the cost of heating a huge home they no longer need
Cost of living impact
In reality, the cost of borrowing is still relatively low. That said there is concern about the rising cost of living which, while not of major concern to the higher end of the market will impact the lower end, which drives the market.
Interestingly though, the Financial Policy Committee* is withdrawing its affordability test recommendation as of 1 August 2022. If lenders follow this recommendation a significant number of first time buyers will be able to get on the property ladder. By this I mean those who are paying e.g. £1200 a month in rent but can’t get a mortgage or £800 a month. This is good news not just for the sustainability of the market but ethically. Personally I think this change could have the most positive impact on the market we’ve seen in years, not in terms of pricing but in terms of who can afford to buy.
Irresponsible estate agent behaviour
I’m going there! In the last couple of weeks I’ve heard 2 examples of irresponsible, if not disgraceful behaviour from large brands:
1. An agency with several offices is now telling their staff to list everything they can, at any price and deal with a price reduction later. This not only gives sellers false hope but damages the market. These properties will inevitably drop in value and then come the headlines: “prices slashed as market plummets”, because when have we ever seen a headline saying “property market trucking along nicely”? Next up, buyers will be asking for enormous discounts based on these headlines – overpricing can become a self-fulfilling prophecy.
2. A major ‘luxury’ brand has been caught in the act of the above. They’ve recently listed a property that I declined to list, due to unrealistic price expectations from the seller. A viewer was told, during the viewing, that the property was indeed overpriced. I heard this from the viewer who is now buying an alternative property through me, at a realistic price.
So what does this mean?
The market has shifted, price expectations need to be adjusted accordingly. Look at my market update from last month about the Betty/Doris scenario. As always, it’s crucial to ensure your property has the right defined target market and marketing strategy so you can sell in good time.
No agent wants to undersell a property, however tactics can sometimes lead to this. Make sure you choose the right agent who can advise you well and execute a plan to give you the best chance of achieving the right price.
To discuss the sale of your home, feel free to call us anytime.
Founder & Director