London has long been viewed as a desirable place to own property and despite underlying caution among purchasers uncertain on the future of interest rates, confidence in the mainstream market remains broadly positive.
Following a slowdown earlier this year, the London market is picking up again with transactions growing and house prices in the capital motoring on to new heights as limited supply takes its toll.
With plenty of buyers competing for properties on the market, sensibly priced homes are changing hands quickly. Any home that does not attract offers within the first few weeks of being marketed for sale may be priced too high, even if it has received multiple viewings, and every day it sits on the market makes it become less valuable in the minds of purchasers, and today’s buyers are completely value driven.
Naturally, homeowners want to sell their property for as much money as possible, so the temptation to test the market and ask that little bit more is ever-present. But with price-to-income values in the capital now at an all-time high and with the top end of the market now paying considerably more in stamp duty, over-priced properties are simply not shifting, especially with purchasers looking to limit the impact of stamp duty rises by being even more price sensitive.
The change in stamp duty that requires purchasers of homes costing upwards of £937,000 to pay more tax, coupled with economic turmoil in emerging markets, such as China and Russia, has also led to a decline in the number of affluent overseas nationals acquiring homes in the capital over the past year.
People from Asia, for instance, made up 26% of those buying homes in wealthy areas of London in the first three quarters of 2014. That figure dropped to just 6% over the corresponding period in 2015 – a further reminder that those who over price their homes risk frightening away buyers, especially at the top of the market.
Of course there is a great deal you can do to improve your property’s chances of selling quickly at the price you want, but nothing will have a greater effect than pricing it correctly in the first place. You can declutter, dress the property in the finest designer furniture, hire a Feng Shui expert or even buy a bread maker, but the most important place to spend your bucks is on a good estate agent. Estate agents spend all day, every day, working in the local property market, seeing what goes on, recognising trends and knowing subconsciously what the right course of action is based upon their years of accumulated knowledge.
It’s during times when buyers’ and sellers’ expectations are furthest apart, such as today, that this experience is the most valuable. A good agent who understands the market is well worth their fee when selling, not just for the overall smoother experience you’ll have, but for the price they can achieve.
A common mistake when pricing is to ‘try’ a higher price to see how the market reacts, and then hit the double whammy by reducing it by too little over too long a period. The surest way to a top price is to correctly interpret conditions in the hyper-local market for your property at the time of selling. If that sounds like a mouthful it’s because it is. Pricing should take into account the exact circumstances of your property and your individual position (vis-a-vis timing).
In today’s market even over-priced properties are receiving plenty of viewings as buyers feel like they have time to shop around before making an offer. In this market this is arguably even worse than if no buyer looked at all. Over-priced properties that pop up on Rightmove as they get reduced risk looking unattractive to a buyer. It’s human nature, nobody wants what others don’t. At least if they haven’t seen it yet it gives you a chance that it’ll pique their curiosity when it comes down in price. But this is a far worse strategy than pricing right in the first place.
Of course, the aim of your pricing strategy should be to achieve the highest price possible. It should generate viewings, competition between buyers and therefore a higher price. If viewings don’t translate into offers, price should be corrected promptly to rectify your error and get buyers interested. It’s for this reason that when it comes to pricing your property, especially at the top end of the market, you need to trust your estate agent to give you good advice on pricing strategy. If you believe your agent isn’t up to the task, it’s time to find one that is.
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