Monday, November 22, 2010

NOW that’s what I call a reality gap!

'Reality gap’ in property prices drives buyers from the market

"A spectacular “reality gap” has opened up in London between asking prices in estate agent windows and what buyers are prepared to pay, research reveals today. The difference has increased more than tenfold since 2003, leaving many buyers frustrated by prices that are often little below or even above their boom-time highs. In 2003 the gap between average asking prices in London and average sale prices stood at £6,574, or about three per cent. But by this year it had exploded to more than £79,000 or 24 per cent. Estate agents say the phenomenon helps to explain why the capital's property market has been so sluggish in recent years."

Posted by mark wadsworth @ 03:31 PM (2223 views)
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11 thoughts on “NOW that’s what I call a reality gap!

  • Utterly insane!

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  • sibley's b'stard child says:

    “The housing market remained bumping along the bottom in October with just 44,000 mortgages approved…”

    Bumping along the bottom; that does tickle me. I rather fancy the property market is like a cartoon whereby Wil E Cayote has just fallen down the canyon and has temporary respite on a branch part way down which is rapidly coming away in his hands…

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  • So that 3 bed semi in Collier’s Wood on at £400k is only worth £300k? Bargain!

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  • mark wadsworth says:

    Alan 540, that does raise the obvious question – if EAs know that a house they stick on for £400k will only sell for £300k, why aren’t they keener to pass on ‘cheeky offers’ in the region of £300k?

    I have done this a few times for a giggle, and the EA usually says no way will vendor accept, and they sometimes get back to me to tell me that the offer has been turned down.

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  • I have a flat I like near me, on the market for £143k, would it be reasonable to put in an offer of £120k?

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  • Mind the gap please.

    It can only widen when rates rise, so vendors must wake up now to any offer before we are all well and truly priced out.

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  • I wonder if EA’s keeping prices artificially high is some sort of desperate attempt to keep valuations higher?

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  • Irish asking prices are still ridiculous!

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  • I think it’s Catch 22 for the Estate Agents:
    suggest a realistic price and the vendor opts for the other estate agent who claimed he could get a higher offer;
    BUT….
    get the business with an unrealistic price and …. the property does not sell anywhere near that price.

    What we need is a propagation of the message that sales statistics are too average to be meaningful to a vendor’s specific circumstances.
    If the property is not selling then .. drop the price! Is next year really going to be a better climate for clinching the sale? Go on, drop the price!

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  • ‘EA usually says no way will vendor accept’. Hmmm… I wonder if this is because the vendor sees many other properties selling at the higher prices, or because that’s the value the EA suggested? I suspect the latter!

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  • Wrt 7 & 8: There is a strong element of truth in what both of you say.

    My suspicion is that vendor psychology has not sufficiently shifted as yet and they tend to feel that lower market prices don’t apply to their precious and special home. In short, they are waiting for the some fool to fall for their house and pay over the odds. They have only known a bull market and so the same tactics have always worked.

    This will go on, ad nauseam, until interest rates rise or the market ends up being led by probates and repossessions.

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