Over pricing of property by owners taking properties out of race in times of a quieter and challenging market
Over-optimism – that is exactly the word that can sum up the case with UK landlords at present, if we go by the views of the leading online property websites and estate agents across the country. While, expecting handsome returns is good, stretching it too far could jeopardise seller’s chances of getting handsome returns and even prove to be damaging for house owners – as the present trend shows. An expert says that it is best to be realistic for achieving better results. Indeed, the case of over-pricing by house owners has proved to be true since there are few takers of expensive properties.
As a result, house owners are forced to cut down on the asking price. Reducing the asking price is fine, but most house owners are doing this in parts, which is making their case worse and tagging their properties as stale. Therefore, over-pricing is ultimately leading to the formerly (originally) expensive houses being looked at with suspicion. Potential buyers think that something is wrong with the property which virtually moves the property out of race. Even if a house owner wants to reduce the price, he or she should do that in a chunk, which should be around 5 per cent of the original asking price since reducing the price by sums such as £10,000 is not enough because on the percentile front, it does not make much difference.
This ‘race’ among the house owners has setup sort of a sale in the run up to the festive season who are looking forward to sell their properties hoping a house is a perfect gift for Christmas. This desperate bid by house property owners to sell their property is proving to be damaging to them as they reduce the price in parts.
According to the property website, Rightmove, 37 per cent of available properties on its website are now asking a lower price than the original price, which is the highest figure for this time of the year since 2012. The average reduction price for one reduction between the original price and the post-reduction price has been 6.3 per cent. The average asking price on a home that has freshly to the market across England and Wales in November is £311,043, which is down £2,392 in October – a fall by 0.8 per cent. The north east of England saw the maximum monthly fall at £144,186, a fall by 5 per cent.
However, there are exceptions to this as Yorkshire and the Humber as figures for these regions seem to go in the opposite direction and registering an increase in asking price. To put it in figures, the average asking figure went up to £180,766 in November, indicating a 0.6 per cent raise.
The director of Rightmove, Miles Shipside, said that many sellers are trying to tempt distracted buyers to look at their property by offering more attractive pricing because of the quieter time of the year and more challenging market conditions. He said that many sellers who have been on the market for a while are curbing their initial pricing hoping buyers will select it.
Shipside that the market has been price-sensitive for a while and added the fact that a high proportion of properties are reducing their original asking price suggests sellers and agents have been overpricing. On an average, these properties have been overpriced more than 6 per cent as has been subsequently proved. Analysis by Rightmove showed that houses that have successfully sold typically generated 40 per cent more online interest in the first three weeks of listing. Shipside said that by overpricing, sellers lose the vital initial three weeks period after which the seller has to reduce the price, making the property appear dubious.
These results are echoed by Lucy Pendleton, co-founder director of estate agent James Pendleton in London who says that it is vital for sellers not to discount their home in “dribs and drabs”. She said that by dropping the asking price in increments, the listed property looks unwanted, with no increase in the number of viewings which should, otherwise, come with a handsome discount.
Kevin Shaw, national sales director at Leaders, said the demand from buyers is strong across the country, but over-optimism should be avoided. He said that once a property goes stale, the seller has to reduce the prices further which no seller wants.