Textbook thinking would have us believe that market sentiments have improved dramatically and sales are taking place ‘thick and fast’ but,in reality, this is not quite the case and let me explain why.
There is no question that in the run up to the Election buyers kept their moving intentions very quiet as they contemplated a ‘financial holocaust’ were the Labour Party to be elected. Sellers felt like the Captain of the Marie Celeste with no activity to speak of and all was ‘set fair’ for a moribund property market if not a full blown crash. The sales that did take place were at discounted prices where the sellers accepted the reality of the situation and the few buyers that abounded took a long view on the economic outlook even if the Socialist government were to be elected .
The elation from the Election result was palpable and the pent-up enthusiasm from the sellers’ point of view has been very conspicuous as they try and rescue back values by means of higher asking prices.
The problem is there is now a slight hiatus since the enthusiasm of the purchasers to pay higher prices (given the cost of moving with the Stamp Duty increases) is lagging somewhat behind. This disconnect is resulting in far fewer transactions than sellers would have us believe as they try and claw back the territory they have lost over the past year.
To be honest with inflation remaining low, with little prospect of higher interest rates in the short term, mortgages being reasonably plentiful and a growing economy, there are few clouds in the sky. However, negative sentiments before the Election were so well entrenched that it will take a number of months for buying activity to reach the level that sellers assume is already the case.
The transaction costs over £1million, including estate agents and solicitors’ fees, are now 15% and this is a big hurdle to climb when considering a move which is why, some homeowners, have decided to ‘remain put’ and chose to extend/build basements in their existing homes in order to save these costs.
So, its ‘slowly, slowly catchy Monkey’, rather than ‘first one off the blocks’ which should be the mantra of the Residential Property Market.
Written by Trevor Abrahmsohn.
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