Approximately 80% of the properties a buying agency is acquiring for its clients are being snapped up for less than the sellers paid for it.
Jo Eccles of the agency Accord says: “Many sellers have been holding firm on pricing – for several years in some cases – trying to recoup the price they paid for the property as a minimum, or their stamp duty cost too. This has been one of the biggest factors driving the price expectation stand-off between buyers and sellers.
“But in recent weeks we have seen a significant shift in the mindset of many sellers, reluctantly accepting market conditions and the need to tolerate a loss in order to achieve a sale. One seller, who had previously insisted on breaking even on their £21m Kensington home, has just accepted an offer of £18.5m. Another, whose break-even was £15.5m excluding stamp duty, has just accepted under £14m. These losses are being seen across all price points in the market.
“Most of these sellers are not forced but they are fatigued by the lack of appetite or simply wanting to move on – and they will accept a loss for a highly credible buyer approaching the situation with sensitivity and the ability to perform.
“It’s important to note that the price per square foot being achieved doesn’t represent ‘blood on the street’ as one family office told me they were hoping to find. Many of the prime postcodes are still achieving £2,500 – £3,500 p/sq ft – so they are not ‘cheap’, but they now represent value for money with no peak of the market premium attached.”
Eccles says that withsellers now adopting more realistic pricing, more buyers are being enticed into the market.
Many have been circling for some time and are acting decisively when properties are priced to reflect current conditions. Interestingly, this momentum among buyers has continued into the school holidays, defying the seasonal drop off we usually see once schools have broken up.
She continues: “Sellers who have been bold enough to undercut the market are not only benefiting from increased competition, but also from herd mentality, whereby one offer can lead quickly to several.
“More than 60% of the transactions we’ve been involved in during the last six weeks have resulted in competitive bids, which has taken some buyers by surprise, and we have seen this dynamic play out with client purchases in Belgravia, Chelsea, Kensington, Queens Park and Hampstead.
“One of the key challenges facing buyers is confidently discerning the true value of the property and whether it has been priced to sell, or a negotiation margin has been factored in – and adapting their approach accordingly. Each scenario needs to be considered on its own merit and in such a dynamic and complex market, our clients value the clarity and confidence we bring both on values and negotiation strategy.”
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