Lenders are trying not to lend and are just cherry-picking for profit. With approximately half the mortgages funds available, sellers have to decide whether to try and attract the half of buyers that can still buy. For most sellers, that means whatever they were thinking of asking at the peak of the boom, they need to take at least 10% off.
London, UK (PRWEB) July 1, 2008
In today's tough UK property market, home sellers are facing twin challenges:
1) Shortage of buyers - Research from the Council of Mortgage Lenders shows that UK lending almost halved during the first quarter of 2008, resulting in 142,300 mortgages.
2) Increased competition - research by rightmove.co.uk indicates that there are 25% more properties on the market, in the UK compared to six months ago. 1 million sellers in the UK are now competing for just 150,000 buyers - 15:1
To attract that perfect buyer to your one-in-a-million home, rightmove.co.uk is encouraging sellers to think like professional marketers, taking a scientific approach to selling houses which focuses on the 3Ps of attraction: Price, Presentation and Promotion:
1) Pricing: Intelligent, researched pricing will set your home apart from the crowd. The more 'buzz' you create around your home when it initially comes onto the market, the quicker it will sell and the better result you'll achieve.
Do you know how your competition is pricing?
2) Product: It's a cliché but first impressions count. Package your home so that it's a product people want to buy, and a place buyers can see themselves living.
Is your garden tidy and the interior neat and neutral?
3) Promotion: How do you get your property to stand out to the serious buyers? This used to be the simple matter of advertising as "House of the Week" in your local paper but today's buyers are much more savvy now. These days, a third of buyers will view the house they eventually buy online first so it's vital that you ensure your property is "showcased" at the top of the page.
Does your estate agent offer online property showcasing as part of its sales strategy?
To sell your home in a buyer's market- it's all about the 3Ps of attraction!
With a London house price fall of 1.4% which is more severe than the national UK picture, new to the market sellers' average asking prices fell by £4,531 this month compared to last month. The 1.4% drop is the largest fall we have ever measured in London in June; the previous record being -0.7% in 2005.
Miles Shipside, commercial director of ww.rightmove.co.uk property website comments: "This is a belated but in some ways welcome adjustment by sellers to lower their asking prices in London. It should go some way to helping buyers whose affordability is being stretched still further by rising inflation and mortgage rates."
The higher priced London boroughs have once again proved to be the ones holding their nerve. Both Westminster and Kensington & Chelsea still saw a rise in average asking house prices of 0.7% and 0.6% respectively, with average asking prices still over £1 million. Conversely, one of the worst performing areas was lower-priced Greenwich, where the average price is now a comparatively modest £260,404, having dropped an average of nearly £7,000 since last month.
Miles Shipside adds: "Areas with more exclusive homes that are in limited supply tend to resist falls for longer than property types that are in greater supply. When more sellers of similar properties are in competition, they drop their prices to attract buyers to choose theirs over others. It is the less desirable areas with more run of the mill homes that tend to fall first. The middle to top end of the market has seen more hype in their pricing however, so if the market slowdown continues, they could find they have to be even more negotiable in the future."
After two years of London bucking the national UK trend, it now appears that the capital is falling in line with the rest of the country. The widening gap between some sellers' asking price aspirations and what buyers are willing or able to pay is one of the factors behind the illiquid property market and low volumes of transactions. Getting serious about attracting buyers through more realistic pricing now appears to be more firmly on sellers agendas, after months of denial.
Further reductions in the asking house prices will be required for properties in over supply, as buyer affordability is still deteriorating against the wider economic backdrop of the average cost of living outstripping wage rises and the upwards spiral of mortgage rates. The restrictions on mortgage availability give sellers an additional challenge, as the number of readily mortgageable buyers they can target has been severely restricted.
Shipside adds: "Lenders are trying not to lend and are just cherry-picking for profit. With approximately half the mortgages funds available, sellers have to decide whether to try and attract the half of buyers that can still buy. For most sellers, that means whatever they were thinking of asking at the peak of the boom, they need to take at least 10% off."
Evidence of the challenge facing sellers is research from http://www.rightmove.co.uk showing the doubling of the ratio of properties for sale to successful buyers. http://www.rightmove.co.uk research shows a ratio of 15 properties for sale for every successful buyer*. Last year saw an average of 7:1.
After a decade of relatively easy selling conditions, motivated sellers and their estate agents need to act together to ensure their property has the power to attract that one buyer away from the other 14 competitor homes. Many estate agents were not in the market in the early 90's downturn and in the meantime, new technology and resources have emerged to fundamentally change successful sales techniques. The transparency and reach of the internet means buyers are much more informed, and with one million properties for sale at the moment, all of which can be easily accessed online, there is no hiding if your home is not properly priced and marketed.
With the higher level of competition and given the difficult economic background and low level of transactions, sellers and estate agents need to 'sell their way out' of this downturn by being very pro-active.
- Research from Rightmove.co.uk of total properties for sale in the UK marketplace and successful sales this year compared to 2007.