Demand for property remains in UK market, but sellers cautious

Written by Ray Clancy

Friday, 10 December 2010 12:36

Demand from property buyers is not falling off in the UK and actually increased in November, according to the latest figures from the National Association of Estate Agents (NAEA).

The association’s monthly housing market report found that the average estate agent branch had 241 house hunters registered in November, up from 218 in October.

The report also found that sales levels remained constant for the fourth month in a row, with the average branch selling seven properties. This was particularly positive as the market is entering its annual seasonal slowdown, when activity traditionally slows.

However despite this evidence that sales will be made for people bringing their property to market, the number of registered sellers fell slightly in November. The average branch had 64 properties on its books, compared to 67 in October. The percentage of sales being made to first time buyers also fell from 23% in October to 19% in November.

‘There is still clear evidence of demand for property in the UK housing market. In fact, given the restrictions on mortgage lending and the approach of Christmas, the true level of demand is probably higher than indicated by our figures,’ said Michael Jones, president of the NAEA.

‘These are not window shoppers. Our agents are continuing to make sales and it is particularly pleasing to see sales figures remain constant at this time of the year. We would like to see more people bring their properties to market. There are two reasons why this isn’t happening. First, it’ close to Christmas and people don’t like to uproot their family during the holidays. Also, some sellers in our experience continue to have unrealistic expectations over the value of their property. These potential sellers are likely to be holding back in the hope of price rises during 2011,’ he explained.

‘We believe that prices are likely to remain reasonably stable for the next 12 months, dependant on interest rates remaining low of course, and so we hope that this isn't misplaced optimism,’ Jones added.

The secret to selling property in the current UK market is to focus on creating footfall in a property by pricing correctly from the start, according to property consultant Cluttons.

With the current shortage of stock, some agents will often overvalue a property just to win the instruction. However, as buyers are better informed than ever before, this approach is unlikely to lead to the best final sale price, it says.

Cluttons has instead been pricing properties to sell, and in most cases this has created serious competition amongst buyers, resulting in above asking price sales.

‘Sellers shouldn’t be over zealous on price. While values remain relatively strong in the prime central London market there is still market sensitivity. Buyers are very well informed; if sellers price above the market level they are liable to alienate a proportion of their target buyers. With limited footfall through the door, a property can get stale very quickly,’ said James Hyman, partner for Residential sales at Cluttons.

‘It is better to price competitively in the first place, thereby generating plenty of interest and lots of viewings and creating a situation where buyers are competing to secure the property, rather than overvaluing initially and having to drop the price four to five weeks later. This will result in a faster sale and higher final sale price,’ he explained.

‘Properties need to be under offer in six weeks to harness the higher levels of interest while it is new to the market. Going to market with the highest valuation is not necessarily the best way to secure the highest price. Buyers know the true market value and will no longer just offer the traditional 10% below asking price,’ he added.

As a result of this approach, Cluttons has seen a number of properties go to sealed bids in recent weeks across its Central London offices.