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‘Special vendors are distorting the housing market’

He said: "To demonstrate what we mean, consider two identical houses next door to each other.

"One is lived in by a local, well-settled family whose only reason for moving is for an extra bedroom or bigger garden – something they may want but do not desperately need.

"The other house is lived in by another family and the man of the house has just been promoted to a job some 300 miles away. His children need to start their new school in September and he does not want to be apart from his wife and family living the hotel life.

"A purchaser comes along and views both properties. They are both on the market at £400,000 and he does not mind which property he buys and offers both £330,000. The settled, local family immediately say ‘no’ but the family moving away are disappointed but consider it worth negotiating, and agree to accept £340,000.

"They hope that they can negotiate a similar competitive price for their new home and it means that the family can be together and the children start their school on time.

"They can’t be blamed for taking the offer, but does it really mean that the value of the property is £340,000? I would suggest that they are a ‘special vendor’, and although it is the only figure that can be recorded it is not necessarily fairly representative of the value."

Atwell said there were similar issues with new homes, where developers are finding it difficult to sell properties. With on-going overheads, a need for cash flow and budgets to achieve, they are discounting to quite high levels, particularly to bulk purchasers for apartments in some cities.

"In addition mortgage valuers have become expert at ensuring they are netting out any incentives such as legal fees and carpets," he said.

"The sale prices are, therefore, at a fairly low level and whilst they are the only figures that can honestly be reported to the Land Registry, again, they may be a false representation of value based on a special vendor.

"The figures also include a volume of repossessed properties which are all too often sold by public auction. This is perceived to demonstrate best value but all too often the properties are being snapped up at too low prices by clever investors. An auction generally will only achieve a premium in a good market when there is competition for the property."

Atwell believes the situation is unlikely to change until the housing market picks up.

"Whilst there are definite signs of more activity the properties being sold are all too often by the special vendors. It will take some months but the tide will turn and the inevitable shortage of housing with so few being built, will create a market where the special vendors say ‘no’," he said.

"When this happens I feel that the value will not have dropped as much as reported by the statistical price information available. So the message is that now must be a good time to buy from a special vendor before it’s too late.

"With current interest rate levels, and mortgages far more available than is being reported in the media, it must be a good time to buy a property."

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