Everything Sells at a Price…

October 25, 2024

But in the property market, how you arrive at that price can be as important as the price itself. More on that in a moment. Firstly, financial markets are in countdown mode to Rachel Reeves’ inaugural budget as Labour Chancellor on October 30. Just days later all eyes will be on Bank of England (BoE) Governor Bailey as he delivers the Monetary Policy Committee (MPC) verdict on interest rates.

But it’s not just financial markets waiting for the ball to drop. The direction of the housing market is enmeshed in these fiscal, monetary, and political machinations.?

As we wait for these events to play out, let’s poke around in some data for the Chelsea and Fulham property markets which examines the correlation between time on market and price reductions. ?

As you view the following chart, remember that a buyer completes their property search, on average, in 6-12 weeks.

The key take-aways from this graphic are:

1.?????? There’s a healthy supply of new homes coming onstream;

2.?????? Approximately 40% of total stock has a tenure under three months;

3.?????? A similar volume of properties has been sitting on the portals for more than six months.

The obvious problem for aged listings is competing with new properties coming to market. Beyond six months they are drifting into obsolescence. Buyers harbor various concerns - pricing, cosmetics, and structural integrity foremost. Any sense of urgency flies out the window.

The next metric to examine is pricing, and specifically, the prevalence of price reductions across this market segment applying the same timeframes.

The picture which emerges is:

1.?????? Seven per cent of sellers have reduced their price in the first few weeks. Overpriced?? ?

2.?????? The price reduction curve shows a significant blip in the period leading up to 90 days on market. Mere coincidence that most agency contracts expire at this juncture?

3.?????? As for that tranche of properties sitting on the market for over six months, approximately three-in-five had at least one price reduction… yet remain unsold.

The quandary for sellers caught in no-man’s land is whether it makes sense to chase price down a rabbit hole to find a buyer. Or roll the dice on changing agent. Or withdraw the property from sale.

This could be when an inconvenient truth surfaces. Property presentation. To be fair, this omission may well have served the interests of both parties initially. Homeowners are often reluctant to invest time and money into an asset being sold. The principal goal of agents is simply to win the listing. It’s an unholy alliance that often ends in tears. ?

Here's why I am focused on this subject. Attractively presented properties:

·?????? Warrant a higher asking price;

·?????? Enjoy more viewings;

·?????? Sell quicker;

·?????? Command a higher sale price.

Btw, from the moment when a buyer walks through the front door of your home, their brain processes within 30 seconds whether it’s thumbs up or down. Actually, that’s a lie. The clock is ticking from the moment their eyes latch onto your property from the pavement. Tick-tock. ?

Think all estate agents are the same? Think again.