Should you drop your house price to sell?
£1m has been knocked off this house to get a sale. As the market slips, vendors are dropping their prices - but there is still some way to go before we hit the bottom
Click here to see how property prices have dropped during the credit crunch
When Mariateresa Boffo-O'Kane decided to sell her two-bedroom flat in Turnham Green, west London, last December, it looked as if she would escape the doom and gloom that was already beginning to engulf the property market. Despite reports in the press of crumbling house prices, her immaculately renovated home was put onto the market at £650,000 - some £250,000 more than she had paid for it 18 months earlier. The valuation was, to put it mildly, somewhat optimistic.
Last month, after several viewings, she cut its price by almost £100,000 to £569,950 - but still had no takers. "It's just not shifting at all," says Boffo-O'Kane, 42, who is selling through Foxtons (020 8996 6000, www.foxtons.co.uk ). "It was clearly too high a price, but you know how it is: the estate agent tells you one thing and the price goes to your head a bit." Now, after receiving just one offer - of £500,000, rejected at the time as derisory - she is thinking of reducing the price yet again, "but not by a huge amount". In the meantime, like many frustrated sellers, she is letting her property out.
For Boffo-O'Kane, and others like her, the penny has finally dropped. For several months, many vendors were effectively in denial, unwilling to accept that a falling market meant it was not just the value of other people's houses that had fallen - theirs, too, was worth less. The result, the Royal Institution of Chartered Surveyors (Rics) reported last week, has been a drop in the number of properties changing hands to the lowest level since 1978 - lower even than during the depths of the recession in the early 1990s.
As the first anniversary of the credit crunch approaches, and with the bad news - from soaring food and energy prices to predictions of interest-rate rises - still coming, sellers seem finally to be getting real. The website www.propertysnake.co.uk lists 185,082 homes across the country that have had their asking prices reduced - some by as much as 48%. Agents' windows and websites are full of properties marked down sharply in the hope of a sale.
Take Winslow Hall, a beautiful Christopher Wren house with 22 acres in Buckinghamshire, viewed last year by Tony and Cherie Blair when it was on the market for £3m. It is now for sale through Savills for £2.5m (01295 228002, www.savills.co.uk ). Or Gifford Hall, a William and Mary house set in four acres in Broughton Gifford, Wiltshire. The six-bedroom property, which has walled gardens, a pool and a pavilion, went on sale last year for £3.5m. After three price cuts, it is now on the market for £2.5m, again through Savills (01225 474550).
At the other end of the scale, a semidetached cottage on the edge of Framlingham - a second-home hot spot on the Suffolk coast - has just had its price cut from £310,000 to £299,950, through Clarke & Simpson (01728 724200, www.clarkeandsimpson.co.uk ).
"It's all about realism," says Marc Goldberg, head of residential sales at the estate agency Hamptons International. "You get some people who take our advice straightaway and others who would like to see if they can get the same price as six or nine months ago. But it's not possible. We are frank with people and we are turning away vendors with unreal expectations."
What should a would-be seller do? "It is important to price realistically and take account of market conditions - 15% down on the peak of last year," Goldberg continues. "Get a good idea of the prices at which properties have actually exchanged recently, not just their asking prices. If your property has had 40 viewings and no offers, it is unlikely that the next 40 viewings will produce anything different." Simon Rubinsohn, chief economist at Rics, agrees: "Agents are making sales where vendors are pricing realistically."
Not that price cuts alone are always enough to sell a property: with the credit crisis getting worse rather than better, agents say deals are continuing to fall through when prospective buyers fail to obtain the mortgage they had been counting on.
"The chances of selling your home in a month are now half what they were this time last year," says Miles Shipside, commercial director of Rightmove, the property website that monitors asking prices. "Lenders are being more critical, only half the mortgage funds are available and the choice of products is even more reduced. Deals are falling through, and properties are returning to the market at ever lower prices."
Faced with such problems, some sellers are postponing their decision to move - or, like Boffo-O'Kane, choosing to let out their property instead. Happily for them, demand for rental properties is rising - as are rents. The young and transient, who have traditionally been the mainstay of the rental market, are being joined by a new group of would-be tenants: those who are fortunate enough to have sold their homes at the top of the market and are waiting for prices to fall before plunging back in.
Yet those putting off a sale in the hope of a quick recovery may be disappointed: indeed, the latest statistics suggest the market may still have some way to go before it hits the bottom and starts to pick up again. The Halifax reported a drop in prices of 2.4% in May – the seventh month in the past eight to have seen falls. The Council of Mortgage Lenders, meanwhile, has forecast that repossessions will rise by 50% this year to 45,000.
The residential property futures market, which is based on the Halifax index, makes for even grimmer reading: it indicated last week that prices would fall by more than 20% by 2011 and would not return to current levels until 2017. While that prediction looks overly pessimistic to most analysts, there seems little doubt that things will get worse for homeowners before they get better."My suspicion is that the indices we have seen so far do not reflect the full extent of the fall," says Lucian Cook, director of residential research for Savills, which predicts that prices will continue to fall over the next few months, ending the year 8%-10%
down. With access to mortgage finance continuing to be difficult, next year is unlikely to be much brighter. "Sentiment is such that even if someone waved a magic wand and the credit crisis eased tomorrow, we would still see some falls next year," he says.
Ed Mead, director of the London-based agency Douglas & Gordon, also believes that the fall still has some way to go. "Previous crashes have never taken less than five years to correct themselves," he says. "It is a question of how far and how fast it falls.
"There is little doubt that those who sell for what they can get now are going to be looking cleverer than those who wait in the hope that this is a short-term correction."
Bargain buys
Glebelands, a Grade II-listed former rectory set in 1.75 acres in Dibden, Hampshire, hasn't had any offers since it came on the market in the summer of 2006 for £1.25m. The price of the five-bed Queen Anne house with outbuildings has just been reduced to £895,000. Savills; 023 8071 3990, www.savills.co.uk
Even the smarter streets of Fulham, in southwest London, are beginning to struggle. This five-bedroom period house in SW6, with a double reception, has just had £200,000 lopped off its price. It is now for sale for £995,000. John D Wood; 020 7731 4223, www.johndwood.co.uk
Built in traditional Cotswold stone, the Corner House, in Chipping Campden, Gloucestershire, has had its asking price trimmed for the third time. The fourbed property is on the market for £798,000 - £182,000 less than the original price. Jackson-Stops & Staff; 01386 840224, www.jackson-stops.co.uk
Down by a more modest £20,000 to £575,000, the White Cottage, in Piddinghoe, East Sussex, has been on the market for four months. The Grade II-listed property, 6½ miles from Lewes, has three bedrooms, two reception rooms and a conservatory. Oakley; 01273 487444, www.oakleyproperty.com
--
Jean-Louis Kayitenkore
Procurement Consultant
Gsm: +250-08470205
Home: +250-55104140
P.O. Box 3867
Kigali-Rwanda
East Africa
Blog: http://www.cepgl.blogspot.com
Skype ID : Kayisa66
Posts
No comments:
Post a Comment