Two separate property reports came out today. The first, from Rightmove, states that asking prices on their website have edged up but by less in May than expected (0.7%) and that unsold stock levels are at an all time high amongst subscribing agents, at 71 properties per branch up from 68. This is the third monthly increase in a row of properties languishing.
The second report hails from the Council of Mortgage Lenders. It says that mortgage lending was UP 25% in March compared to February. 45,000 loans instead of 36,000. Moreover, borrowing by first time buyers has recovered faster than amongst other homebuyers.
There seems to be somewhat of a contradiction here, notwithstanding the slight lag in the time periods covered.
Properties certainly do seem to be selling in better number and the CML numbers support that. But the Rightmove stats point to a still over optimistic pricing culture amongst sellers and their estate agents, the latter being largely to blame for their own demise in this respect now. Regardless of funding issues, demand will only be supported by justifiable prices. Those homes that are out of sync will just sit there unsold as indeed is clearly the case so predominantly currently as shown by Rightmove’s figures.
No amount of freeing up of mortgage monies will buck the reality of market value in the wake of the past two years of propery hurt and nor should it (again) or else we will be back to sub prime and Northern Rock type turbo lending doing their bit to prematurely destroy the planet. A sort of ‘global lending overheating’ rather than mere gobal warming.
So, price your home right or you just won’t sell. If it is accurately costed, you will sell. Home owners and, importantly, estate agents must wake up to that simple but pertinent philosophy or else transactional volumes will not recover from their stall and no amount of blaming HIPs or mortgage lenders as the reason for a naff market will significantly change that, although they do both have a part to play.
It’s therefore surprising that agents’ have increased the value of their new instructions at all in May, when faced with record levels of unsold homes as they are. Stupid more than surprising in fact.
To get the market moving its not just about mortgage liquidity. The CML numbers show that too. There are plenty of home loans around and at better LTVs and rates than for some time. Arrangement fees are lower too and are much less a bar to entry.
But agents must start being honest and bravely realistic with their values and sellers should be less greedy and not taken in by the initial flattery of a nice price. Because buyers aren’t, well… buying it really.
Long will volumes stagnate until a much needed realism kicks in.