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Will Estate Agents Ever Start Talking Market Down?

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This is just out of interest, I wastn't interested in housing during the last crash.

Do estate agents ever start talking down the market? It seems to me that estate agents rely on turnover. Of course selling higher price houses means they make more money, but if they are not turning anything than thats the worst situation to be in. Ie lower prices but lots of turnover is hardly the end of the world for estate agents, no one selling is.

Will this affect EA behaviour? Once its clear the market istn't going up, will EA start talking down the market so that prices and expectations are lowered, people start buying and selling again at lower prices and they can then start gradually talking it up again?

Is that the dynamic? It seems rightmove do a little bit of talking down the market, and they are partially owned by EAs, it makes sense to me - but will it happen?

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This is just out of interest, I wastn't interested in housing during the last crash.

Do estate agents ever start talking down the market? It seems to me that estate agents rely on turnover. Of course selling higher price houses means they make more money, but if they are not turning anything than thats the worst situation to be in. Ie lower prices but lots of turnover is hardly the end of the world for estate agents, no one selling is.

Will this affect EA behaviour? Once its clear the market istn't going up, will EA start talking down the market so that prices and expectations are lowered, people start buying and selling again at lower prices and they can then start gradually talking it up again?

Is that the dynamic? It seems rightmove do a little bit of talking down the market, and they are partially owned by EAs, it makes sense to me - but will it happen?

It will happen - they are just not desperate enough yet. Still living off the good times at the moment and, of course, they are still selling some properties at daft prices (and therefore commissions).

Last time round (1991) an Estate Agent said to me:

'I am prepared to put this property on the market for £150k and I want to make it quite clear I will not put it on for a penny more. We are no longer prepared to waste money marketing over-priced property that will not sell.'

I figure we will get this sort of message next Spring - when they have had a year of poor sales and two non-appearances of the Spring bounce. It may come even sooner - once the YOY figures go negative.

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Properties per agent has been on an upward trend for a year now, and has climbed every month bar one this year to 72 per agent (rightmove)...they will be under pressure to clear the backlog. I think the anecdotal evidence is slowly seeping into seller's minds, and they are now accepting <95% of asking price.

Human nature being what it is, all the BTLers who've sold up will be boasting to their friends that "they've got out at the top of the market", which might nudge a few others into trying to do the same.

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It may come even sooner - once the YOY figures go negative.

I'm wondering if they're going to report YOY -ve figures at all. I'm getting sceptical.

I've noticed next to no sales, and only some new entrants to the market, so it's difficult to guage whether EAs are already playing this 'price down you silly seller' game. I know of only one such house: A 2 bed with front and back garden that came up for the same as the typical terrace.

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I'm wondering if they're going to report YOY -ve figures at all. I'm getting sceptical.

It won't be for some time, but I think they'll have to show up eventually. London is already teetering on the brink at +0.7%, what happens in London eventually ripples out into the provinces.

Remember that anything below about 3% HPI means the price is dropping in real terms, given that incomes are increasing by about 3%+ at the moment. Most of us would have to wait a long time to buy at those sorts of rates though!

edit: just looked at the London prices(rightmove) for last September. Prices need to fall by about 1.3% this month for London to have negative YoY HPI. They fell by 1.6% last month, so it could happen. Even if London prices are static till then, YoY HPI for London will be negative in October. :D:D

Edited by Leodhasach

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It will happen - they are just not desperate enough yet. Still living off the good times at the moment and, of course, they are still selling some properties at daft prices (and therefore commissions).

Last time round (1991) an Estate Agent said to me:

'I am prepared to put this property on the market for £150k and I want to make it quite clear I will not put it on for a penny more. We are no longer prepared to waste money marketing over-priced property that will not sell.'

I figure we will get this sort of message next Spring - when they have had a year of poor sales and two non-appearances of the Spring bounce. It may come even sooner - once the YOY figures go negative.

1991 was still a couple of years into the last crash when the market was clearly in crisis (which it is not just yet), which just goes to show that it takes YEARS rather than months for public opinion to change. FWIW, I still think EAs and the population in general are too stupid realise that increasing oversupply is a BAD thing for their industry. Sellers will always try to hold out for the best price and EAs will always need to pander to this.

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1991 was still a couple of years into the last crash when the market was clearly in crisis (which it is not just yet), which just goes to show that it takes YEARS rather than months for public opinion to change.

Yes, we bought in 1991 which was being talked up as the bottom of the crash at the time but watched our flat lose 25%of its value over the next 3 years.

By 1995, the sentiment was so negative that we thought we would never see our purchase price again, so switched from endowment to repayment to get the loan size down to enable us to sell.

Every single uptick will be seized by the press as a sign of the recovery. It would be naive to expect anything else.

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This is just out of interest, I wastn't interested in housing during the last crash.

Do estate agents ever start talking down the market? It seems to me that estate agents rely on turnover. Of course selling higher price houses means they make more money, but if they are not turning anything than thats the worst situation to be in. Ie lower prices but lots of turnover is hardly the end of the world for estate agents, no one selling is.

Will this affect EA behaviour? Once its clear the market istn't going up, will EA start talking down the market so that prices and expectations are lowered, people start buying and selling again at lower prices and they can then start gradually talking it up again?

Is that the dynamic? It seems rightmove do a little bit of talking down the market, and they are partially owned by EAs, it makes sense to me - but will it happen?

hmm this is interesting. With regards to positioning (if they look at that) do they postion with:

a) low volume high margin

B) high volume low margin

right now in a bad market, they should talk the market down.

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This is just out of interest, I wastn't interested in housing during the last crash.

Do estate agents ever start talking down the market? It seems to me that estate agents rely on turnover. Of course selling higher price houses means they make more money, but if they are not turning anything than thats the worst situation to be in. Ie lower prices but lots of turnover is hardly the end of the world for estate agents, no one selling is.

Will this affect EA behaviour? Once its clear the market istn't going up, will EA start talking down the market so that prices and expectations are lowered, people start buying and selling again at lower prices and they can then start gradually talking it up again?

Is that the dynamic? It seems rightmove do a little bit of talking down the market, and they are partially owned by EAs, it makes sense to me - but will it happen?

The experienced EAs probably want to do this. The Johnny-come-latelies, of which there must be many, are so caught up in the popular boom that they cannot see this is in their interest.

It will take a while for even the experienced EAs to actually turn their stories around. This is because it is a "game of chicken" to some extent. If you are bearish when the other EAs in your neck of the woods are bullish, many sellers will just go with your competitors.

frugalista

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If just one of the EA's I spoke to before I put the house on the market where slightly bearish, I would have gone with them if thye took the same cut.

I am sure there are enough sellers that realise it is difficult to sell that an EA's in each area could corner the market for realistic sellers.

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The experienced EAs probably want to do this. The Johnny-come-latelies, of which there must be many, are so caught up in the popular boom that they cannot see this is in their interest.

frugalista

It reminds me of some estate agent lady who was on tv talking about buying flats for students in Bath. I actually was in a similiar situation and my parents bought a flat where I went to University, but only after they checked out the rent they could expect from it when I left (£1k/month on £170k property). I think her quote was "and they know prices won't go down" describing why parents are buying. Made me laugh, university accomadation has seen some of the strongest bombs in prices and we know what that can mean.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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