Why does it seem that so many properties are reducing their price at the moment? Is it a crash?
Why are so many properties being reduced? Surely that is a bad sign? Is the market crashing???? Read this article to find out…
If you are seriously considering buying a new home, you have likely registered with local agents and maybe even subscribed to receive updates via email. You will get an email in your inbox whenever a new property comes on the market or has a new price.
Recent years have seen an astronomical increase in property prices that seemed to come quite out of the blue. During the pandemic, market experts and economists predicted a considerable price crash, some even suggesting that property prices could drop by up to 30%. But the opposite happened.
Property prices soared. A heady mix of furlough salary payments and nowhere to spend the income and availability of mortgage lending finance, coupled with time spent at home staring at the same four walls, sparked an appetite to move and the ability to do so for many of us. This sudden increase in demand for the housing market pushed property prices up.
But, as we all know, what goes up must come down, right? So, are those properties reducing their prices, showing the beginnings of a property crash?
Of course, we don't have a crystal ball, and no one can really accurately predict the future, as evidenced by the experts getting it so very wrong in 2020. But, what we can do is consider the market as a whole. In reality, the property market is still higher than those pre-pandemic figures.
Yes, it's true that things have slowed down a little, partially because that sense of urgency has dissipated and life has returned somewhat back to 'normal', but also because we have new challenges to consider. Rising inflation, the cost of living crisis and increasing interest rates impact the number of potential buyers looking for a new home.
At one point, we had an average of 10 buyers looking to buy every property available on the market. That number has returned to a far more realistic rate now. The jostling for offers and viewing appointments and the ensuing bidding wars are not happening anymore. And that is purely down to the return to a more stable and predictable market.
Of course, the definition of a recession is somewhat cloudy. The GDP must drop for two consecutive quarters to be recorded as a recession. But that doesn't consider that the drop can be minuscule, meaning that, even though it is classed as a recession, it could still be significantly higher than the figures before the boom period.
At present, the market is holding strong, inflation is coming down, and hopefully, interest rates will not continue to rise. So, what is the significance of price reductions? Why does every other property in your emails seem to be reduced?
In truth, there isn't much significance at all. Each seller has their own circumstances, so this can not be assessed on a macro level. In most cases, it will come down to timescale. Rightmove says sellers are taking an average of 55 days to secure a buyer. That's a significant increase from the 33 days recorded back in July last year, and so, the impatience of the seller will often lead them to reduce the price to find a buyer faster.
It could also be because the market has been a little up and down lately; the seller tested the market with a higher figure and has now corrected things to a more reasonable price. It could just as simply be that they have found a house to buy and don't want to miss out.
Price reductions are actually a great way to secure a buyer if you have been on the market for a few months without success:
- You move your property into a new price bracket, and therefore, your property is seen by a new audience.
- You speed up the length of time you are on the market, which is very important if you are in a rush to sell.
- You have tested the market and now know for certain that your property pricing strategy is correct.
Every seller has their own story and circumstances. There is no blanket response to the question, "Why are so many people reducing their prices?" And for many sellers, a price correction is very positive.
If you are currently trying to sell your property and are not seeing the level of interest or activity you had hoped for, it might be time to consider an adjustment in your price. It can be a proactive way to ensure you get your home sold in a timescale that suits you.
Take control of your property sale and get in touch with our team if you need any help or advice with the marketing of your home.