November Sales Market Update for Central London by Rob Hill
As we move towards the Autumn Statement it's clear what is happening to the London Sales Market.
Autumn is traditionally a busy market for Central London Sales after the summer slowdown, but all idiocies appear to show that this year bucks the trend. Data from HMRC stamp duty receipts shows that transaction levels in September were 19% lower that September 2022 and 1% lower that August 2023. The number of new buyer searches registered across all the major property portals is also substantially down.
Last week’s decision by the Bank of England to hold the base rate at 5.25 for a second month after 14 consecutive rises will bring a level of stability and may entice more buyers back to the market but for vendors wishing to sell there needs to be a greater understanding of market forces.
England is a nation of homeowners and aspiring homeowners. We wish to buy properties but the national press daily publishes articles suggesting major price crashes and this, combined with the interest rates, brings about caution with buyers. In order to sell you need to put yourself in the shoes of the buyer of your property.
What are the monthly costs for them just in simple mortgage terms to own your property? How many genuine buyers for your property will there be who will be willing to foot this monthly bill? If you were in their shoes with a large deposit in the bank earning 5% interest in an easy access account, would you be willing to take the plunge right now and buy a property when there is so much noise surrounding a potential price crash?
The role of an estate agent is to educate vendors and buyers on the current market conditions. Values and market sentiment can shift quickly, and good agents know this long before official statistics are released about what happened in the previous quarter.
Many agents are fundamentally failing in this regard. I regularly witness properties coming to market at vastly inflated sums that are so far from the reality of the market - they will simply sit on the market until they are reduced. If they do sell ultimately, they will sell for less and take far more time to do so.
Tim Banister, Rightmove’s Director of Property Science states in their most recent House Price Index report that “Accurately priced properties succeed in finding a buyer in less than half the time that it takes those that need a price reduction, and when they do find a buyer, the sale is also 50% less likely to fall through.”
Buyers registered in any given market receive daily property alerts from portals and agents and if these alerts are price reductions many buyers feel that prices are falling. Often this is not the case it’s simply a case of poor valuation in the first place but it’s very damaging for buyer confidence.
In a buoyant sales market where demand clearly outstrips supply its advisable to test the market and put on a small premium on your property, after all you only get to sell any given property once, so you want to get the maximum amount. In the current market where the number of instructions is on the rise and the number of actual buyers declining you need to make your property more attractive to attract a buyer.
If you are serious about selling you need to work closely with your agent and ensure that you come to market at the correct price first time. Correctly priced properties generate more viewings, and it is on those viewings that buyers can become emotionally attached to the property and it’s impossible to quantify in financial terms what this emotional attachment is worth. The more viewings you have the greater the potential you have of achieving asking price or more than asking price. Even if you feel the price is too low remember the market will always dictate the price so it could sell for more than the listed price or it could be that while you had hoped for more the market has spoken and the value is as suggested.
A final note of caution. I am increasingly hearing about vendors signing sole agency terms of sixteen and even twenty-four weeks. If an agent suggests this question their motivation, if their valuation is substantially higher their strategy should be clear. Protect yourself - do not sign away what in many cases is your most valuable asset to any third party for months on end in a challenging market.
By signing a sole agency of no more than six weeks you are giving the agent adequate time to sell the property and if they are unwilling to compromise on this pick another agent.
Rest assured there are still buyers out there so if you are serious about selling or need to sell you can do so. If you would like to get an accurate appraisal of your property even if you are currently on the market with another agent, please do not hesitate to get in touch. We will as ever be honest in our appraisal even if it’s not what you want to hear at least you will be armed with the facts so you can plan accordingly for the future.
I look forward in anticipation to the upcoming autumn statement and will update you as to our thoughts on its implications for the market.
Rob Hill, Director, MBA
Greater London Properties, Central London Residential Estate Agents