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Recently the prime property market has seen a shortage of stock coming to the market place whilst demand has still remained high.
Normally, these circumstances would see a property brought to the market having strong competition from competing buyers and a quick sale achieved .
However, these trends in most cases are currently not applying with the opposite occurring as buyer psychology appears to be changing.
Headlines such as “Business confidence falls in may” and “Greek exit could cost UK £4.8bn” have re-in-forced the on-going fragile economic conditions and has left buyers very cautious and seeing them delay from making big purchasing decisions.
Buyers are also seeing the market place as a buyers market and to proceed to purchase are expecting a reduction from the guide price.
Mr Andrew Findley Director at Elite Property Search a prime property buying agency commented ““buyers today are not willing to over pay for a property. To engage they need to feel they are getting a fair deal.”
This stance has been strengthened by the number of properties which have come to market over the past 12 months priced at or close to levels experienced in the peak of 2007 and which having not been sold are now seeing large reductions.
For example Zac Goldsmith the Conservative MP for Richmond Park and North Kingston, has recently reduced the price on his Devon estate, an 8 bed manor house sat within 543. First brought to the market in November 2011 at £7m, it is now available for £6.5m.
Also a 50 acre development plot at Milton Lilbourne Wiltshire with planning permission for an 8 bed manor house, came to the market last year at £2.75m and is now available through Knight Frank at £2.25m.
Price reductions are often used as a tactic to get buyers to engage with the expectation that more than one buyer will gain interest. This competition then tends to lead to the price increasing as buyers bid against each other.
Competition is key to a property achieving its best price. This being the case in the purchase of Bucklebury Manor Berkshire, a 7 bed manor house which came to the market through Savills in April 2012 with a guide price of £4m. With 4 interested parties bidding, it finally achieved a sale price of £5m, with the winning bid coming from Carole and Michael Middleton parents to the Duchess of Cambridge.
Mr Findley commented further by saying “Bucklebury demonstrates a very valuable point. A good house priced correctly when entering the market sells quickly and achieves the best and right price. Using price reductions as a tactic does run a potentially costly risk. If after a price reduction a property still does not gain any interest going forward the new reduced price is likely to be interpreted as the asking price and in a buyers market a buyer would expect to pay a price below this meaning that the seller is likely to only receive offers well below their original expectations”.
For further assistance with your property acquisition please contact Elite Property Search on:
Central Office: Andrew Findley tel: +44 (0) 1865 479980 ;
South East Office: Tim Sharp tel: +44 (0) 1483 256775 ;
South West Office: Joe Nisbet tel: +44 (0) 1202 766566 ;
London Office: Max Storey tel: +44 (0) 207 060 2338;