How’s the market?
Any estate agent will be familiar with that question, which is frequently asked in a private setting as much as in a professional one. Nearly everyone seems to have an interest in the market, but I often find it difficult to reply succinctly as the concept of “the market” is itself misleading. Property varies enormously (that is probably why it holds such a fascination for so many people) and ”the market” is in fact, made up of many smaller markets, all subject their own influences. What might affect the buying or selling decisions of a participant in the central Manchester flat market, is unlikely to be the same as someone considering the sale or purchase of a family home here in Devon.
Nearly everyone will already hold their own view, based on what they read in the press, their own personal experience or that of friends and family, so it is very difficult to sum up the state of a very diverse market in a few words.
Jackson stops specialise in the sale of the upper end of the rural property market across the country and here in the West Country we have 8 offices. In the last six months our average sale price in the West Country was around £900,000 up from around £800,000 in the previous 6 months. So, my views on the market are based on that evidence and may not be applicable to other areas or sectors.
Ask any potential buyer of their recent experience and they will tell you of a shortage of stock and the competition from other buyers. That characterisation of the market is true but that does not paint a full picture.
Some statistics illustrate what I mean.
There is undoubtedly still strong competition; as is evidenced by a 36% increase in the number of viewings/ property from an average of 9 in 2021 to an average of 13½ so far in 2022.
The number of offers/ property has also risen by a similar percentage from an average of 2½ in 2021 to 3½ so far in 2022. Those two statistics would suggest there is still plenty of demand but look backwards. Looking forwards, the number of enquiries on Rightmove across the West Country postcodes for all price levels are largely the same as this time last year.
What about supply? Again, according to Rightmove, the number of new properties listed in May this year was nearly 45% higher than listed in May 2021 but the number of sales agreed in May 2022 was only 9% above May 2021 and there were double the number of price reductions this year compared to May last year. Those figures would suggest that increased prices are tempting more sellers into the market, albeit the additional supply is still not sufficient for the strong demand.
What is also clear to me is, that correctly marketed properties are taking a much shorter time to sell, so the active inventory of property for sale at any one time is limited, creating the illusion of a shortage of supply.
That is most obvious with the best properties, where vendors can still expect to get more than one potential buyer offering on their property within a matter of days following listing and are quite likely to achieve above the guide price. So far this year, the average selling price of properties across all of the 8 Jackson-Stops West Country offices was 3% higher than the average asking price.
The evidence of an increasing number of price reductions suggests that buyer sentiment may be weakening, and they are becoming more discerning and being less enthusiastic about properties that might have drawbacks or may appear optimistically priced.
I therefore believe we are at a point of change in the market following the impetus given to it by the upheaval of the pandemic, where prices have typically risen by between 25 and 30%. I believe we will be able to look back with the benefit of hindsight in a years’ time and see that the rising interest rates and increases in the rate of inflation were beginning to have an effect on the market in the early summer of 2022. I am not anticipating any price falls, but I do believe competition amongst buyers will lessen, which will help all those who have been constrained from entering the market for fear of being left homeless.
If you are contemplating a move and would like to discuss in more detail how the market might affect your decision-making, we would be delighted to visit your property to advise further.