A report from The Post Office has given property market enthusiasts some very interesting food for thought. The report shows that on average homes in the UK are on the market for 91 days before they are sold, an increase of 33 days from 2012. While that is an extra month on the market there may be a number of reasons – whatever the case it has certainly prompted many discussions!
Strong property prices
There is a train of thought suggesting that houses are now taking longer to sell because owners are looking to maximise their income. The very fact that the UK property market has been extremely strong over the last few years does seem to support this train of thought. When you bear in mind that the market has shown signs of consolidating at slightly lower levels just lately could we see this average market listing period start to fall?
Fear and greed
The fear that property owners may be selling an asset too soon and greed, reflected in an obsession with the “best price” may play a part in this phenomenon. The fact that the average UK home is now valued in excess of £200,000 can give some people a false benchmark when looking to sell their own property. This is where the fear and greed factors come into play with owners hanging on for what they deem to be the “correct price” even if the markets are telling them otherwise.
One area which has certainly played into the hands of sellers is the lack of supply and the relatively strong demand for property in recent times. Whether this gives people a false sense of confidence that they will obtain the “real price” of their property is debatable but what would happen if supply was to increase and demand was to fall?
The ratio between supply/demand for property in the UK has on the whole favoured demand but there have been instances where the ratio has been finely balanced. It would not take a massive move in these figures to turn the ratio on its head and begin to put pressure on sellers, placing buyers in the driving seat.
Overpricing your property
In theory the extended period on which the average home in the UK remains on the market could be impacted by overpricing as result of overconfidence. We have all seen instances of sellers listing their properties at relatively high prices only to take a lower price to actually close the deal. You could argue that overpricing your property allows you to give some leeway on the downside but it is a dangerous game to play.
There is no doubt that on the whole the UK property market has been relatively strong for some time now. This may well have given sellers the confidence to hold out for the best price but if the property is potentially overpriced in the first place this is a risky game. If markets were to turn quickly then the difference between the listed selling price and the “market value” could widen in a relatively short period of time.
In many ways buying and selling a property is like a game of poker, you want to hold out for the best result but you don’t want to give your hand away too early. Are you any good at poker?