Trying to work out still what moves the property market? Upwards or downwards – it has been landmark events that have played on the London property market for the past number of years. From the excesses of the bankers bonuses in the noughties, to the ensuing stock-market melt-down, the ‘Arab Spring’ and the Euro-Crisis. Domestically the past year has seen threats of a ‘Mansion Tax’, the abolition of the ‘Non-Dom’ tax status as well as the imposition of a higher banding of SDLT at 12%. You have to have a PHD is psychology and economics to work out what is going on and a sage with supernatural powers to predict the future.
A word that weighs heavily is ‘expectation’. The London property market can be all about expectation: One just hopes that expectations meet at some stage and that buyers are willing to pay the amounts that sellers expect. Running a business based on hope is not ideal and I think that those involved in this business have to do more to fill the gaps to make trading in property an overall better experience. Huge swings and fluctuations do not make for a solid market and much of this is due to an industry-wide malaise – overvaluing.
Working out at which price is not always an easy task and often agents fall-foul of a simple ‘overvaluation’ technique in order to win an instruction. The problem is that in the new market-place, this can be extremely destabilising. Now not everyone always gets the price right and sellers often would love to believe that the highest valuation is the most accurate – but the market has become far more sophisticated and transparent. There are so many tools available online for comparing prices, seeing how long a property has been on and whether there have been any price reductions.
Price reductions are in my view one of the most damaging aspects of the London property market. Certainly there are many bona fide cases where sometimes the agent has simply got it wrong unintentionally or where market conditions have significantly shifted. A property might be so unique it would be hard to put the right price on it, or cases where very little has sold in the area and comparable sales are very thin or non-existent. However you don’t see nearly as many increases as you do reductions – so it looks to me like the industry is one of overvaluation. To most buyers the property market must seem to be in a constant stage of discounting and this is evident daily by the number of reduced properties flashing up with ‘price reduction’ in red on the property portals. Is there any other market that sees such a level of constant discounting? One dealing in such a high value item such as property needs much better care by those responsible for setting prices. I am hopeful that sellers will continue to be more discerning and ask the agents who are pitching for business to demonstrate the value. In my view this alone would make a huge difference in creating a more solid and more professional market place.