Rightmove’s latest report indicates that the price of property coming onto the market has increased by the lowest amount for eight years.
- Latest data shows that February saw an increase in asking prices of 2% or £5,986 to average £306,231. This is the lowest monthly increase since February 2009 and falls below the average of 5% which is typically seen in the month of February.
- Annually, prices increased by 2.4%, which is the smallest rise since April 2013.
- The average time to sell increased from 72 to 79 days between December and January.
On these findings, Director of Rightmove, Miles Shipside commented that buyers are becoming increasingly price sensitive: “The majority of the market is price sensitive with most agents we surveyed reporting that possible buyers are reluctant to enquire about a property just a few percent too high in price. With the annual rate of price increase now at 2.3%, a property that is over-priced by more than 5% will have to wait more than two years for the market to catch up with it.”
Many sellers initially put their property on the market at a high asking price and reduce this over time. However, studies suggest that this could be ineffective with over-priced properties often staying on the market for much longer. For example, a property that had been reduced by more than 5% took an average of 64 days longer to sell and had an average final sale price of almost £20,000 less than properties that sold without such a significant reduction of the asking price.
“Over-pricing loses you that vital initial interest and impetus, and buyers often have reservations about a property that has not sold as quickly as others or has had a price reduction.”
Which? reports that 19% of properties sold last year were priced 5% or more below their initial asking price and it claims this was the result of “Estate Agent over-valuations”. One in five properties had been “heavily reduced” which “implies an initial valuation that was too high.
“Heavily reduced properties started with a higher listing price of £266,000 on average and [had] a much lower sale price at £241,000, leaving the seller £20,000 (to the nearest thousand) worse off than the rest. It adds up to an estimated loss of £4.3 billion a year to these sellers in England and Wales.”
Cris Fowler, Branch Manager of the Let Leeds Pudsey Branch cautions property owners not to be ‘sucked in’ to unrealistic valuation figures: “Quite a common trick for unscrupulous Estate Agents is to over-value a property in order to win your business over a competitor, knowing full well it will receive little to no interest at such an elevated figure. At Let Leeds, whether you’re selling or letting, you’ll always receive an accurate, honest figure that we will work hard to achieve.”
Overall, overpricing properties deters buyers and it is therefore essential that sellers obtain an accurate valuation.
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