Various news sources have reported that the price of property coming to market has fallen by 0.2% (-£656) this month, making this the first monthly fall of 2019. Prices are traditionally weaker in the second half of the year, however this year also sees the highest total stock per estate agency branch since 2015. With continuing political uncertainty it is expected that buyers in market sectors where there is an over-supply will have a stronger hand negotiating lower prices in the coming months. With sound underlying market fundamentals, apart from the lack of confidence caused by the uncertain political outlook, there should be a better bargaining opportunity for those who have hesitated and missed the busier spring market if they can now find the confidence to engage without waiting for more certainty.
The amount of properties coming to market this month is down by 7.8% this month compared with the same period a year ago, and furthermore fewer sales are being agreed (down by 4.6% in the year-to-date compared to the same period last year). However, estate agents’ total average stock per branch is higher than at any time in the last four years. Average stock is now running at 53.3 properties, the highest number since the 54.0 that was recorded in July 2015. In addition, the average time to secure a buyer is at 62 days, the highest at this time of year since 2013. This longer time to secure a buyer, coupled with higher property stocks, suggest that it will be more of a buyers’ market in the second half of 2019.
Activity is more robust in the mainstream lower and middle markets, made up predominantly of buyers requiring a mortgage rather than cash buyers. The latest figures from UK Finance show that the number of mortgage approvals from the main high-street lenders in May was up by 9.1% year-on-year. New seller asking prices are also holding up better in these sectors, with typical first-time buyer property the same price as last month at 0.0%, while the typical second-stepper home is up slightly at +0.2%. The upper end, comprising four bedroom and larger properties where buyers are less likely to need a mortgage, has dropped by 1.1% month-on-month.
Agent & Expert Views
Carl King , Director of Fraser St James, comments: “ I feel at local level the market was slow at the beginning of the year, from May onwards we have seen a large increase in buyers as the Tameside and North West markets still are performing well. I believe people are sick of waiting for Brexit and are deciding to make the move. Many properties we list on the market sell within 2 weeks. So I believe people are just getting on with it. The market in very buoyant and prices in the area locally remain static after a price rise in the previous quarter. I still feel there is a lack of stock for the area and I hopeful this will improve by the end of the year.
We have seen an increase sales level on last year and feel the North West property market will remain strong."
Miles Shipside, Rightmove director and housing market analyst comments: “The housing market fundamentals remain largely sound in many parts of the country, but the current political climate means that the crucial ingredient of confidence has been impaired, and that is causing some potential buyers and sellers to hesitate. With record employment, low interest rates and good mortgage availability, buyers have a lot in their favour apart from the lack of political certainty. Those who have postponed their purchase should note that estate agency branches have more sellers on their books than at any time for the last four years, so there should be more choice of properties to buy. It could be a good opportunity to negotiate a relative bargain in the second half of the year, if they can set aside the continuing Brexit distractions.”
“Growing numbers of properties on agents’ books even though fewer properties are coming up for sale are evidence of a more challenging market, with more sellers competing to get their transaction over the line. With activity and prices often weaker in the second half of the year, it will be those sellers who are bold enough to price aggressively who will attract buyers with the confidence to act rather than hesitate. It would appear to be sellers in the upper end of the market who need to be boldest on pricing, as data shows that the middle and lower sectors are holding up better.”
“While buoyant mortgage approvals indicate more resilient activity in the lower and middle sectors, it is the cash-rich in the upper end who appear most hesitant to engage. They are often discretionary buyers, whose needs for more space or the motivation for a change of location can be postponed. As a result, sellers in the upper end have had to drop their prices more both month-on-month and year-on-year, suggesting that the best bargain opportunities in the second half of 2019 for canny buyers could be in this price sector. Buyers in all market sectors in the less buoyant south and east of the country are also in the driving seat, but greater market momentum further north means that sellers will still be able to steer clear of buyers who are looking for too cheap a ride on the back of Brexit uncertainty.”
An estate agency analyst has shared with Estate Agent Today his findings on the current and recent conversion rates of online agencies.
Andrew Stanton, who worked in traditional agency for over 30 years, now runs a consultancy called Estate Agency Insights and Strategies. He says that out of some 1.5m homes marketed in the past 12 months, only 100,000 were handled by online agencies. “Although the media loves to talk about cheap fees and online agents, in fact the general public are using the traditional approach” he adds.
Using Rightmove data from yesterday - Tuesday November 13 - he has also given a market snapshot of six major online brands (two under the ownership of Emoov). According to his calculations these are:
Doorsteps - 2,054 properties listed, 1,321 for sale, 733 under offer not exchanged, 28% conversion of listed to sold subject to contract.
Yopa - 5,501 properties listed, 3,539 for sale, 1,962 under offer not exchanged, 35% conversion rate.
Purplebricks - 37,531 properties listed, 21,142 for sale, 16,389 under offer, 43% conversion rate.
Emoov - 2,504 properties listed, 1,696 for sale, 808 under offer, 32% conversion rate.
Tepilo (owned by Emoov) - 1,740 properties listed, 1,162 for sale, 587 under offer, 33% conversion rate.
HouseSimple - 1,140 properties listed, 763 for sale, 341 under offer, 30% conversion rate.
FRASER ST JAMES HAVE A 71% CONVERSION RATE
Stanton says that most of the online agents charge either an up-front fee or a fee payable in a period of time, typically up to 10 months. “So at the conversion rate of ‘for sale to sold’ I think there are a lot of clients who have paid for a service 'getting sold' which they never achieve” he claims.
Stanton also queries the fundamentals of some agencies.
“The bottom line is always the bottom line, so for instance Doorsteps sell your home for £99. If you have 2,054 clients at £99 paid upfront that is £203,346 income, and that will not cover the costs of running that company - if it did they would not keep getting a new round of fundraising” he says.
Stanton previously ran his own agency and worked at Sequence and Blackhorse agencies before setting up Estate Agency Insights and Strategies, which assists agencies grow their business.
Once you've decided to sell your home, chosen an estate agent, repaired, cleaned and prepared your home for viewings, you may think you're ready to get started, but there's one area that's often overlooked by house sellers - lighting.
Poor lighting can often give a bad first impression, even if the property is otherwise perfect. If you don't light your home well, you could sabotage all of your other preparation work. Darkness can make a room feel small, dirty and uninviting - it can make a home look like a teenager's bedroom.
After much speculation, the Bank of England has raised interest rates from 0.5% to 0.75% due to high expectations around the economy, consumer spending, wages and employment.
Although the general rule is that a rise in interest rates is good for savers and bad for borrowers, the 0.5% to 0.75% rise is relatively small, so will not cause difficulty or pain for most homeowners.
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