Split the Difference
You can’t always get what you want…
Asking to achieved splits the country
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Deciding on the asking price for a home is fraught with difficulties. Dealing with the expectations of the seller as well as the valuations of competing agents vying for instructions, make it sensitive work. But it is even more difficult when the market is upset by changes in regulation and/or at a turning point.
Measuring the proportion of sales that are sold above the asking price is a good gauge of the start of a change in the markets appetite for rising prices. But it’s not a uniform thing. Regional markets move differently. The North East stands out as its economic and housing market circumstances are less robust. Price growth in the South has raced away to be 64% higher than five years ago, while in the North East prices are just 9% higher than at the end of 2011. But in the South of England, the fall in the proportion of homes sold for more than the asking price shows the increasing resistance to the pace of price growth.
That resistance is also more apparent among the more expensive homes, especially above £1m. Much of that is a symptom of the change in stamp duty in 2014 causing buyers to negotiate the extra tax into a reduced offer price. Although, weakening expectations of capital growth after the huge previous rises adds to the mix.
Have a little patience...
The time on the market before sale is another indication of changes in the markets tolerance of rising prices. And with low levels of stock, those not in a hurry have time to wait for the right offer. But while low stock levels can support prices, it won’t mean they will always rise as quickly. Reflecting the same phenomenon of more resistance to higher prices in the South – and the North East - time to sell has been increasing too.
And you’ll get what you need
Finally, a fall in the proportion of the achieved price as a proportion of the initial asking price tells us even more. Again, it’s generally a North/ South story. Asking to achieved proportions have remained broadly stable outside of the South of England. This chimes with the data on house prices which shows that the rate of growth of prices is accelerating in the North, stable in the Midlands but slowing – yet still rising - in the South. Even though the asking to achieved ratio is falling, house prices are still rising,but at a slower rate. Many homes still sell for more than the asking price and many more for prices higher than they would have done last year, even if the sum is below the initial asking price. So those selling their homes should take comfort that they will have made money on their sale, allowing them to move on in comfort.
Change in proportion sold above asking price 2016-2017
Proportion of homes sold over the initial asking price
Change in time to sell
Asking to achieved and house price growth (%)