At the beginning of 2010 many commentators said that the election might very well put a damper on the housing market. However, Rightmove has reported in its latest market update that "the week before the election saw the highest number of new sellers coming to market since week commencing 28th June 2008".
While that flood of new sellers might be very gratifying, the lack of buyers able to secure financing and then proceed to competition is considerably lower.
What does this mean for the property market?
The Right Price
The upshot is that properties need to be priced correctly and competitively. Every property will sell for the right price - even less attractive properties will sell provided that their price is attractive enough. Those sellers motivated to sell need to have agents on their side who will give them a fair appraisal of what price their property is likely to achieve.
One of the best ways to ensure that your property is priced correctly is to ask your agent for comparables. Comparables are other properties similar to your own. What asking price are other comparable properties listing for and what are similar properties that have sold recently actually achieved as a sale price?
Pent-Up Need
Even with a lack of available mortgage lending and the election many people have come out of the woodwork to list their homes for sale. As Miles Shipside at Rightmove points out, "New sellers have already been holding back on coming to market for nearly two years, and as kids do not stop growing in a recession, some family houses must be bursting at the seams”.
The New Shape of Property Chains
On the one hand many homeowners will be feeling the pent-up need to move, while on the other hand first time buyers in particular can't get mortgages to make their first move onto the property ladder. This unbalanced outlook means that the market has to either operate at reduced sales volumes or hope that sellers can sell to each other, forming circular chains by trading up and down. With the circular chain model it will be necessary for agents to stay on top of the chain, doing everything in their power to support and hasten the process to keep the chain from breaking down. Agents like Northfields that have a dedicated sales progressor whose sole focus is seeing a sale through to completion will have far more success than other agents. Therefore, it would be a wise move for sellers and buyers to choose an agent with a dedicated sales progressor.
Not sure what property chain is? Click here to find out.
What can we expect from here?
As Rightmove reports, "One of the many issues for the new Government is to review the ‘broken’ housing market. The previous Government’s target of 3 million new homes by 2020 was aimed at meeting projections for growth in the number households. This target is now in tatters with the industry struggling to build even 100,000 homes this year. Assisting higher new-build and resale housing transaction volumes is likely to be an important consideration as part of a consumer-led recovery."
It is not expected that the current tight restrictions being maintained by mortgage lenders will loosen any time soon. Particularly in light of the Greek financial crisis which make may banks more nervous about lending to each other.
There many also be more property coming to the market with the Coalition government scrapping Home Information Packs. Many sellers who were putting off selling their property may be tempted to test the market by listing their homes. This will add more pressure on sellers as the competition to attract buyers becomes more challenging.
Math For the Current Market
The addition of more stock to the property market means that sellers will need to be more realistic in their price expectations. Although many homeowners balk at adjusting their price to suit the market, the maths prove that such a change in the market can be advantageous.
Consider this situation as an example:
You are selling a home worth £150,000 but choose to reduce the price by 10% (a figure picked as a example and to make the math easier).
So you sell the property at a reduced price of £135,000 - a loss of £15,000.
However, you buy a property worth £250,000 that was reduced by 10% to attract a buyer.
Meaning that you, as the buyer, would save £25,000 off the sale price of your new home.
You may have lost £15,000 of the price of your property but you saved £25,000, making you £10,000 better off.
To find out what your property is worth in this market and to see how much you stand to gain by moving, call Northfields Estates now on 0208 840 6666 to arrange your free valuation or click here to request your valuation online.