"Worst housing market for 30 years" as estate agents admit to "overpricing". House price crash on the way ?

This week. Straight from the horses mouth......estate agents admit to "persistent overpricing" by some agents.
The chief executive of Redrow builders described it as ...."the worst market for new and secondhand homes for 30 years."
The chief executive of Persimmon builders said that "adding 20 per cent to a property's value might be achievable in a buoyant market but in tougher times it is likely to leave property prices "marooned".
Which way for house prices now I wonder ?
.........and what price on a recession ?
FINANCIAL TIMES
Estate agents admit to pushing up values
By Roger Blitz in London
Published: January 6 2006 20:42 | Last updated: January 6 2006 20:42
Estate agents, members of a profession not especially known for frankness and honesty, have confessed to a practice long suspected by homebuyers and sellers: overvaluing people's homes.
The National Association of Estate Agents on Friday conceded that housebuilders' accusations of "aspirational pricing" by estate agents, which they claimed had contributed to the stalling of the market last year, were mainly valid. "I would accept that," said Peter Bolton King of the association. "Some estate agents persistently overpriced over the past year."
There were examples, he said, of agents overvaluing properties solely to get instructions from homeowners. But there were also big numbers of homeowners who refused to lower valuations in spite of months of inactivity.
This week Redrow said aspirational pricing by estate agents was contributing to what Neil Fitzsimmons, its chief executive, said was the worst market for new and secondhand homes for 30 years. Property transactions in the year to November were 13 per cent lower than the previous 12 months, according to official statistics.
The chief executives of Persimmon and Wimpey on Friday said aspirational pricing had made market conditions more difficult. John White of Persimmon said that adding 20 per cent to a property's value might be achievable in a buoyant market but in tougher times it is likely to leave property prices "marooned".
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!733 PS. don't shoot the messenger ;-)
Reply to
Crowley

Why not, it's a stupid message.
How does "adding 20% to a property value leading to property prices "marooned"
Equate to:
"Worst housing market for 30 years"
Sorry, there is no correleation between these things whatsoever.
(though both could still be true)
FWIW around my way no-one has added 20% (pa) to their house selling price for three years. My flat is currently valued at less than one that sold two years ago. Prices in other blocks confirm that house price inflation where I like has been 0% for at least two years and you'll not find a professional who will tell you otherwise.
tim
Reply to
tim (moved to sweden)

A friend of mine had their house (3 bed terrace ) valued by 3 local estate agents who all valued it about the same. its in Surrey/ village 2 mins walk to a station with a train journey into London about 30mins. So in many ways very desireable. Good nick ...nice road...nice area. On the market for 2 months..............1 person has viewed.
The market is dead.
Barry
Reply to
Barry

Or the local estate agents routinely overvalue properties, particularly in relation to equivalent properties in other, currently less-desirable, areas in the locality.
Remember that estate agents are primarily interested in their commissions. If they're doing good business anyway, they've no particular interest in receiving a lower commission on your friend's house now rather than waiting a few months in the hope of making a sale at the higher price, inconvenient though this may be for your friend.
Steve
Steve
Reply to
Stephen Glynn
What ever next?
Lawyers admit to pusuing cases for self interest, not clients?
Second hand car dealers admit to selling dodgy cars?
Reply to
Tumbleweed
wrote:
Huh, two months is nothing! How about a year for some of the properties in my road? On my RightMove shortlist I still have properties on there for sale (which I was considering for purchase) which I added in June 2004. On one the price has come down in stages from £150k to £135k now.
That said, the Guardian reported last Thursday "Housing upturn as mortgages hit 2004 levels".
MM
Reply to
MM
Yes thats the way they like to spin it but a HALF of lending is remortgaging ;-)...............
"Remortgaging
Normally, demand for mortgages tails off towards the end of the year and then revives in the spring as people start house hunting again.
However, the CML pointed out that the figures were being bolstered by high levels of remortgaging.
This happens when people stay put but simply move their mortgages to another lender to take advantage of a more favourable deal.
This currently accounts for about half of all new house lending. "
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Reply to
Crowley


Only applicable from a monopoly position. A bird in hand better than two in bush, him said. Volume of business is more important than profit margin.
Reply to
Acute Angina

Prize-winning gobbledegook. If someone could make sense of this sentence do let us know.
Try applying the affordability test.
What's the correlation?
Reply to
Acute Angina


a standard game of estate agents is to tell the greedy seller that they'll sell the house for a higher rate than the market level... this way said greedy seller puts the house with said agent....and not with a more honest rival agency... over time the agent then gets the seller to reduce the price or the market price rises to the originally unrealistic figure.... this is very bad for the (usually) innumerate seller who loses the use of the money during the period of flummery (technical term) and finds themselves 'having to' buy into and even greater rise in that 'desirable' larger property....
regards...
Reply to
abelard

The market's flat (code for collapsing) so if your house is overpriced (ie most of 'em) by 20% (and the rest !) then it ain't gonna sell. Geddit ?
I prefer the p/e test ie prices are at least 40% overpriced on the long running average price to earnings ratio (7 or 8x rather than 3.5x). Big correction due.
Mortgage equity withdrawal (MEW) financing a retail spending boom has kept this so-called "economic miracle" afloat. Latest figures for MEW are 40% down on 2004. Thats a lot less "spending money".
Reply to
Crowley

What the CE of Persimmon is trying to say and the way he said it. Read the sentence analytically and it doesn't make any sense at all.
Reply to
Acute Angina
wrote:
A few years ago I was told by an employee of a local building society that local agents invariably value property at between 10 and 15% over the value a mortgagor would value it at. Next time I went to buy a property I bid 20% less than the asking price and haggled it to about 12% off.
Reply to
AlanG
In message , Crowley writes
Yawn
Same as always happens at this point in the market. In general, people who are forced, (highly motivated), to sell their houses will change their prices so that they sell. People who dont have to sell their houses will hang out for the unreal asking prices, and wont sell.
The smart estate agents identify the niche in their market which is motivated to sell, and target it. The not so smart keep plugging at unrealistic sellers, telling them what they want to hear, and waste time and money not selling houses.
Always possible - depends on the underlying conditions.
Hardly suspected - more likely expected.
Yawn.....
Yawn...
But your opening statements/questions suggest a level of support.
Reply to
Richard Faulkner
In message , Stephen Glynn writes
Estate agents overvalue to get properties on their books - there is no other reason. If it's not on the books you cant sell it. Once on the books, they work on getting the price down in the hope that it will sell eventually.
They are not interested in increasing individual commissions, they are interested in increasing overall commissions.
Estate agents are interested in volumes. If house prices are lower, more will sell, and they will probably sell quicker..
E.g. fee 1% 100 houses @ £200,000 = £200,000 fee 1% 150 houses @ £150,000 = £225,000 fee 1% 125 houses @ £175,000 = £218,000
etc...
They have every interest in this, but competition between agents tends to preclude it.
They are actually hoping to wait a few months, or longer, to sell at a lower price.
Reply to
Richard Faulkner

I think he means that if the market's rising fast enough, you can get away with offering the house for 20% more than you think it's worth at the moment, because you'll probably find someone prepared to buy it before too long. If the market's not rising so fast, though, you won't.
Steve
Reply to
Stephen Glynn


That's what he meant, not what he said though. Adding 20 per cent to property value likely to leave property prices marooned?
Reply to
Acute Angina

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