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I’ll tell you what you aren’t selling people – bricks and mortar. Let me explain.
The Chief Executive of Black & Decker once said: “People don’t go into a DIY store because they need one of our drills. They go in because they need a hole in a wall.”
What is it that you are really selling when you put your house on the market?
The Bank of England’s Monetary Policy Committee has just announced a rise in the Bank of England base rate of 0.25% - the first increase in over a decade.
The base rate is the figure on which mortgage rates in particular are based and a whole generation of aspiring homeowners will be wondering what to make of it. Well panic not – although the base rate has effectively doubled, 0.25% remains a very small increase and simply returns us to the same 0.5% rate that had been in force between March 2009 and August last year, when it was dropped in response to the Brexit referendum result.
I spend a lot of time thinking about and discussing the differences between full-service high street estate agents and self-service, low-cost online agents with clients and peer groups. There are the inevitable fee comparisons, real people or computer algorithms, doing your own viewings and conducting negotiations yourself or viewings being pre-qualified and accompanied by an experienced, highly skilled sales negotiator and how this might affect the price you achieve. These and I suspect many others.
But something happened the other day that I hadn’t considered and is hugely significant in this debate!
There is a very different vibe to the property market from last month, with many reports suggesting that the market is rapidly changing from being a sellers’ market to what is starting to look a lot like the beginning of a buyers’ market in some areas (although nobody has told our Lock and Key office yet…shhh!)
The latest survey by the RICS reports a 20% increase in the number of their members who reported a fall, rather than a rise, in buyer demand last month. This is the sixth month of reported falling buyer enquiries. This is partly substantiated by Rightmove reporting an annual fall of 5.9% in the number of sales agreed.
“Moving House” may be the term we commonly use, but moving HOME is surely a better description for one of life’s more stressful experiences. Few changes in life, other than a relationship, can stir such emotions.
As a leading estate agent, we are effectively “agents of change” and whilst our natural focus might be to help people move in a practical sense, we find we can be most effective when we really empathise with our clients.
In my opinion it is strange to think that a home is just bricks and mortar. Home is so much more than that…
As the internet has become the first port of call for most prospective buyers, estate agents can feel somewhat swamped with so-called buyers. The issue is not a lack of enquiries, but which of those enquiries will turn out to be serious.
Many websites (online call centre agents especially) are simply an invitation for buyers to register on line, yet all too often this results in huge numbers of poorly qualified “window shoppers” applying. Whilst this is a good service for the buyer who is “just browsing” it can be difficult to assess the seriousness of genuine buyers from their basic requirements alone.
Really? We shall see. The way I see it, British house prices will at best keep up with inflation this year and next, with no rises expected at all this year in London, and the so-called silver economy appears to be the driving force behind growth in the UK housing market, with those aged 66 and over the only age group to see an increase in the number of property exchanges over the past quarter.
By comparison, the number of home movers in all other age brackets has fallen over the past three months, with those in the 18-25 and 26-35 age groups seeing the biggest drops. The data underscores the difficulties faced by young people wanting to get onto the property ladder. House prices are so inflated, particularly in London, that the royal Bank of Mum and Dad now helps fund 26pc of all property transactions in the UK, providing deposits for more than 298,000 mortgages in 2016.
That means the Bank of Mum and Dad has become the equivalent of the ninth-biggest mortgage lender in the UK, making it bigger than Clydesdale Bank in the mortgage market. This is not a problem of individual profligacy for this generation but unprecedented historical rises in the cost of housing, and our PM’s solution - an extension on help-to-buy! Let’s throw more debt at a problem.
On a positive note and one I am always happy about - Our latest figures at Lock & Key show people are beginning to experience ‘Brexit fatigue’ they are bored of it all and are getting on with their lives, and we are seeing net volume transactions up across the board from last year.
Very recently some local sellers have approached Lock & Key to sell their property following a less-than-impressive performance by an online alternative to “proper” estate agency. Although it is always tempting to say “I told you so”, we wouldn’t be so harsh with someone who has just been through the mill with the wrong choice of agent.
And it seems they are not alone. In fact, a survey* of over 14,000 sellers, the largest ever undertaken, has demonstrated that people overwhelmingly prefer to use a real, human estate agent for a variety of reasons. Ninety four per cent sellers still prefer to use a traditional estate agent!
August is a tricky time to comment on the property market. The market is usually understandably subdued during prime holiday season, but this is often a self-fulfilling prophesy.
This is because those sellers who would have liked to have entered the market during the summer delay doing so, in the belief that the hottest spring buyers have probably found somewhere by now, or are on holiday.
I am engaged in a never-ending struggle with my inbox, receiving over 100 emails a day. Staying on top of them is like clearing the Augean stables. Of those, many contain the term “house prices”. The first one is something like: how much a new Waitrose can add to the value of my home. The second is commentary about the various house price indices released each month. The most obvious comment to make about these indices is that they are all statistically flawed. Some measure only sentiment, not actual transaction prices. Some measure only property bought with a mortgage from a particular lender. There are geographic biases. And they all suffer from the fact that every property is different; it is not an asset class that lends itself to indexation. But nobody ever says that. Instead, there are various explanations as to why prices are either not going up, or going up more in some places than others.
As you look through the pages of most local property newspapers and magazines, all you generally see are pictures of properties. As you turn from page to page the only discernable difference between estate agents is their corporate colour scheme, which does not tell you a great deal about who they are, what they stand for, or what it would be like to work with them.