Oversupply and overpricing is threatening to stall the market, Home.co.uk has warned.
The property search engine claims that the number of properties getting discounted is now close to a six-year high.
Home said the number of properties reduced in price during May was up 28% annually at 74,847, the highest figure since October 2012.
There were also new records for total stock on the market in England and Wales, hitting a two-year high in June at 516,845, up 8.5% annually.
Similarly, new instructions were up by 11% annually.
Home.co.uk data shows that 58,614 new properties were added to the market in the past two weeks.
This boost has been led by a 20% increase in the east of England and 20% in the south-west.
Overall, Home puts average asking prices at £310,240 in England and Wales, up 1.4% annually and 0.4% on a monthly basis, while typical time on the market has increased by three days compared with June 2017 at 81.
Doug Shephard, director of Home, said: “These metrics clearly show that now, overall, the market is entering a slowdown phase in the property cycle.
“In short, the downturn that started when the London bubble began to deflate has now spread across sufficient regions that the national figures reflect the same. However, this message has not yet reached many of the vendors that placed their properties on the market last month with optimistically high prices.”
Agents on the ground have seen similar scenarios of oversupply, but are insisting that deals are still taking place.
Lucy Pendleton, director of estate agents James Pendleton, told EYE: “The significant rise in the number of on-the-market price cuts is extremely telling.
“The name of the game is to price keenly in this market to drive interest. Even when deals are to be had, in a healthy market, that is usually something that happens behind closed doors and only becomes truly apparent when the data is published by the Land Registry.
“The fact that prices are now dropping before your very eyes en masse on all the property portals is a sign that over-optimism is slowly giving way to reality.
“This is less so in London where price growth has been cooling for some time. The regions have been determined to remain on their own, more bullish, trajectory lately. It can appear to have its own power source in this transitory market, but the truth is the nation’s secret to market vitality is London, and that connection is never severed.”
In Cambridge – a city that regularly tops indices for price growth and sales activity – Cheffins estate agency says it is two- and three-bedroom flats, usually the reserve of now-deterred buy-to-let investors, that have been more sticky.
Richard Freshwater, director of Cheffins, said: “As we are seeing fewer of these types of buyers within the market than we have for many years, there is now a large supply of these properties, and they are not selling at the rate seen previously.
“This market is seeing a bias for all homes being sold at the correct level. Overpricing has been the killer for some homes on the market, and sellers who are realistic on the value of their home can now reap the benefits of active buyers in the market.”
However, over in Northern Ireland, estate agent Michael Chandler said lack of supply is still a major issue.
He said: “There is very limited stock across the board with confidence low regarding people moving up the ladder, due to Brexit and our Government, or lack of it.
“Northern Ireland has been flooded with new-builds in the last year which is also choking the resale market.
“Bidding wars are common on city properties, whilst country homes with land remain extremely hard to shift.”
Comments (8)
Yet some agents – mostly the corporates who pay their negs for listings – still overvaluing and in some cases persuading vendors to go with them at a HIGHER price. Idiotic approach to agency.
To be fair round our way the corporate agents are a little more realistic, we have a number of aggressive ‘new’ independents that have been trying to buy the market for the last few years.
some properties 100k overpriced, tied into 6 month contracts with withdrawal fees.
i cant blame the sellers, if someone offered me 100k i would take it, sad thing is its a number of agents not just 1
In Newcastle and Tynemouth there are not many properties coming onto the market in the 5+ bedrooms market. What does come on is completely overpriced. I have had agents telling me that people are desperate to live on this or that street. I would love to live on some of those streets but not at those silly prices. I then notice these properties coming down by £25,000 to £30,000 within three weeks of going on the market. There is no incentive to rush in, I will wait for the next round of reductions. If I think like that I assume most other buyers are thinking the same.
Similar conditions to 2008.
Company mergers, retailers closing, estate agents closing and restrictive lending.
Is the cycle repeating itself? The full impact of government policies in my opinion is yet to come in the next 12-24 months.
Was saying the very same just yesterday. BOHICA.
I think it may have already arrived!
No this isn’t a recession, yes the government meddling has had an impact (particularly BTL) yes there is a higher supply (not by much though) yes the buyers are always looking for value and yes agents are constantly over egging the price although a lot of times this is because the owners want to test the price. In fact I have been nagging my vendors to be more realistic all last month, some will some wont.
But if I take the same approach with my valuations!!!!
Can you imagine, vendor gets three agents out to value and I’m the only one saying, no your house isn’t worth £550,000 it’s going to sell at £450,000 and the other two have agreed with the vendor it should sell for over £500K. Will I win the instruction?
I took a tough view with clients last year and dropped my instruction levels by 30% but hit my sales target. I got it in the neck for not having higher instruction levels, so this year, guess what I am letting vendors get away with trying a higher price and getting it in the neck for having to drop my asking prices after a few weeks of marketing.
Who ever said we have any easy life clearly doesn’t work in the biz.
So right, agents local to me constantly over value, if I’m in after them, the vendor looks at me like I’ve insulted them with a lower valuation.
Sure enough within a few weeks the property is reduced and then further reduced, often, eventually selling for less than even my valuation. I’m standing my ground, receiving less instructions, but with a high completion rate.