With around 70% of property marketed so far in 2011 still on the market, new sellers will need an edge over their competition to increase their chances of sales success.
Miles Shipside, director of Rightmove comments:
“Summer sellers are more nervous about their selling prospects than the early birds who asked ever higher prices during the first six months of this year. Early sellers in 2011 had a chance of worming their way into the more active spring market, whereas those coming to market now at the onset of the holiday season have to price more aggressively as many buyers have already gone to ground. With seven out of ten properties marketed so far this year still on the market, sellers in the second half of 2011 need to do something different to promote their property and increase their chances of catching those elusive buyers”.
This is the largest July fall for three years, since the 1.8% recorded in 2008. Sellers at this time of year traditionally show more pricing restraint than those in the first six months of the year, and we expect further falls over the next few months as buyer momentum ebbs away due to a combination of seasonal factors and a continuing lack of both mortgage finance and buyer confidence. Early findings from Rightmove’s forthcoming Consumer Confidence Survey, due for release on Monday 25th July, show another fall in housing market sentiment. This muted buyer demand has resulted in average unsold
stock per estate agency branch being the highest we have ever recorded at this time of year, currently standing at 78 properties.
“Against a backdrop of high unsold stock levels and deteriorating buyer sentiment, the proposition that sellers and their estate agents market to potential buyers has to be enticing both in terms of their pricing and the quality of the property’s presentation”.
Analysis by Rightmove shows that 70% of properties that were newly marketed in the first six months of 2011 are still up for sale, a sobering reflection of current market conditions. This is hardly surprising given that lenders are still only approving around half the number of mortgages they were before the credit crunch. As a consequence, sellers have to have sufficient equity to be able to price aggressively to attract scarce buyers and still raise a large enough deposit to fund their next move. This is likely to contribute to new seller numbers remaining subdued. The current weekly run rate of new listings is
27,062, 12% lower than the 30,877 recorded in July 2010. Sellers with sufficient equity are at a considerable advantage in being able, if they are willing, to undercut the competition and then be in a strong position to be able to negotiate a similar reduction if they are purchasing again. They also benefit by being able to put down enough of a deposit to get the most attractive mortgage rates.
Shipside comments: “Many equity-poor aspiring sellers will be trapped in their current homes, either unable to come to market or stuck on the market and unable to reduce to a price that will attract buyer interest. Those that are equity-rich have an opportunity to increase their chances of success by launching to the market at a price below their over-priced and stale competition”.
The current level of retail price inflation is reducing property prices in real terms, which will eventually help frustrated would-be sellers who are currently unwilling or unable to price to sell. The Retail Price Index has outstripped property asking prices by 14% over the last four years, improving buyer affordability but undermining the perception of bricks and mortar as a hedge against inflation.
Shipside summarises: “While property has a good long-term record as a hedge against inflation, in the short term property prices have become significantly cheaper in real terms as the cost of living has gone up, while the cost of housing has stood still or gone backwards”.
Rightmove’s research shows that the first week of marketing creates nearly double the interest of any subsequent week (see chart below). It is therefore vital to set your initial price at the right level to take advantage of the impact made by a fresh property. If a property has gone stale it is necessary to formulate an effective re-launch strategy to recover the situation.
Shipside advises: “The highest level of interest in your property will be in the first week it comes on the market—and first impressions count. It’s often hard for sellers to be objective about their cherished property, so it’s important to look dispassionately at the three Ps: Presentation, Price and Promotion. Make sure it’s looking its best from day one, that you offer better value than any similar property locally, and when you’ve got those two right then make sure your agent markets the socks off it so it really stands out. If you didn’t price and present your property right the first time then you need to
discuss a makeover of the price, appearance and marketing with your agent.”
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