Following the gradual erosion of confidence in the latter part of 2010, 2011 turned out to be a tricky year for residential sales. Transaction levels were badly knocked and a buyers’ market swiftly evolved making negotiations challenging. While there were some very good buyers around, they were cautious and for the most part there were plenty of properties for them to choose from. A disparity between Vendors’ and Buyers’ expectations became evident with offers generally 5% – 10% below guide prices, causing a slow and reluctant correction in pricing for some properties. While those Vendors with an urgency to sell did so, many others disregarded any interest at reduced levels. Of course, some highly geared homeowners are caught between a rock and a hard place with the threat of negative equity hanging over them, while others may simply be content to sit back and wait for better news.
The pool of ready and able buyers has greatly diminished since pre-crunch days. It has been reduced to true cash buyers and those who can afford a hefty deposit while satisfying tight lending criteria. Many buyers are downsizing financially and moving house to realise capital and improve lifestyle, but they still have to sell their own properties and chains are liable to collapse. Steering an agreed sale to exchange of contracts is therefore often an achievement.
Buyers who are able to act now are increasingly risk adverse. They are also taking plenty of time to make decisions because they think that there may be a better property around the corner; this can be a dangerous stance, however. Houses in the best locations are selling very well because that is what everyone is looking for. We have plenty of families waiting for uncompromised, semi-rural period houses, for instance, but they are rare and when they do become available there is always a scrum; the message to buyers, therefore, is widen your horizons and accept that there is no such thing as the perfect house.
So what of the next twelve months? The wider economic picture is affecting confidence and it is confidence that drives markets. There is little certainty as to where interest rates may be this time next year (although it is quite possible they may not have changed), unemployment is rising, measures to cut the national deficit is biting, lending is tight and Europe will be unresolved for a good while yet. The underlying problems are far from over, so it is unlikely that 2012 will fare any better. We can see a similar market this year, perhaps still with slight downward pressure on prices.
There remains an active market, however, so the key to selling is the same as for 2011 – sensible pricing, attention to good marketing and an open mind.