Are asking prices unrealistic or are we simply seeing a confusion of average prices and market segments?
In todays EAT the News that Rightmove have reported an increase in asking prices which, depending on your point of view, shows either an increase in confidence in the market or, another sign of unrealistic pricing and desperation in the housing market. Whatever your viewpoint, these average asking prices do not reflect the average selling price listed by the Land Registry, leading some to speculate that we are heading for a stagnated market. This may be true if these figures are accurate but, using average figures can be very misleading.
For example; lets assume my office is asked to sell 200 properties a year. 150 of which are 3 bed semi’s and come onto the market at £200,000. A further 50 instructions, however are two bed terrace homes at just £90,000. The average asking price of my total property stock is £172,500.
However this year, lets assume, that 3 bed semi’s aren’t selling well as everyone wants a smaller home; so only 50 of the 3 bed semi’s sell but 40 of my terraced homes exchange contracts successfully. This means that my average selling price for the year is £151,111
It’s immediately obvious that the average asking and selling prices bear no relation to the actual figures for housing in the two main sectors in my market. Neither do the average figures show that there is a major mismatch between what is actually selling and what is being put up for sale; yet that is very much the case in the imaginary scenario I have illustrated above.
If we were to look a little deeper behind today’s headlines and use mean and modal figures to analyse the results rather than relying on the oft overused and unintentionally misleading average figures, I suspect (but I have not seen the in-depth figures) that they will show that there are many higher priced properties being put up for sale but, that the majority of sales are actually lower priced, smaller homes.
Does this mean it is a stagnated market? Nationally, it is difficult to tell without looking at historical but accurate data from the Land Registry; to get an accurate picture of what is happening in your area/ region today, your best bet is to speak to a good local agent. All I can say from my area down here in West Cornwall, is that there are larger numbers of people making viewings, trying offers, agreeing sales and looking at our website and Facebook pages; this indicates to me that, in my area at least, we are seeing a gentle recovery and a returning of confidence in the market.
I welcome feedback so please feel free to leave constructive criticisms or ask questions below. If you could also take a second to rate my blog and pass it on to others who you think may find it interesting that would be great. Thanks.
About Chris Wood: Chris is an estate agent with over 25 years of property experience and is based in Penzance and Helston, West Cornwall. He has worked with all sizes and types of businesses from single office independents to the management team and board of RBS and Tesco. A former President Elect of the NAEA and board member of NFoPP until he resigned in 2009, Chris has always championed the highest professional standards for estate agents in the UK. No stranger to the media, he has appeared on various programs including BBC, News 24, ITV, independent and BBC radio and is a regular contributor to trade journals, local and national Newspapers. Chris is on LinkedIn Ecademy Facebook and Twitter Married to Amanda, he lives in Penzance with their children who are slowly flying the nest, his two dogs and his elderly Uncle. In his spare time; Chris likes to keep fit and is a long-standing member of the Territorial Army. He is currently mobilised for a tour of duty in Afghanistan with 1 Rifles as part of 3 Commando Brigade.
Please support the men and women in my unit, The 1st Battalion The Rifles, who become casualties in the line of service during their tour of Afghanistan by making a donation here www.swiftandbold.org