London property agents urge realistic pricing
London estate agents are warning that the capital’s property market could enter a period of stagnation that could be a precursor to a sharp fall in prices.
The gap between asking prices and offers is widening because house sellers are reluctant to accept offers that they consider too low.
The latest figures from Rightmove (covering the four weeks to 10th November) show that the average length of time a property stays on the market in the capital has risen to 87 days.
This is the longest period in November for five years and with the Christmas season close, agents are warning that homes could remain unsold until the spring unless they are realistically priced.
Chris Brown, president-elect of the National Association of Estate Agents, believes that a number of factors have come into play: “The introduction of home information packs, the failure of Northern Rock, the negative press about the US sub-prime market. They all hit about three months ago. That is why it is taking so long to sell.”
He points out that: “The only properties that are moving are the ones where a price correction has been taken into account by the seller.”
According to Ed Mead, sales director at Douglas & Gordon, prices in central London have already decreased by around 5%.
Mr Mead believes that “Whenever market sentiment turns, it always takes about 90 days for vendors to believe it.”
The fall in prices is most evident in the middle to upper end of the market, with properties priced over £1.5 million.
Savills has reported that buyers seeking homes in the £2 million to £4 million price range have fallen in number by a quarter since August of this year and in the £1 million to £2 million range the number has dropped by a fifth.
Tim Le Blanc-Smith of estate agents John D Wood, believes that fears over job security in the City are keeping many potential purchasers away from the property market.
However, properties selling for over £5 million are not affected by the downturn, as many purchasers of so called “super-prime” properties are wealthy foreigners.