A lot has been made in the recent past of the First Time Buyer (FTB) to the continuing health of the UK housing market. Access to mortgages and the deposit required by FTB takes up a lot of news columns and they are continually seen as the lifeblood of the residential market. Because of this we tend to ignore the other, equally as important, people involved.
Any house move has a chain of people involved. In its simplest form that is two, a buyer and a seller. But there are usually a succession of buyers and sellers involved. There must however be a start and end of the chain.
Generally, at the start of the chain is a FTB, a Buy To Letter (BTL), purchaser of second home or maybe a Sold to Rent and buy later returning to ownership.
At the top end is normally death, debt, divorce or disposal (otherwise sale of an unwanted property, BTL shedding property or sale of second home for example).
There is said to be a dearth of property available for sale at the moment, which is holding property prices up. This suggests to me that the four ‘Ds’ above do not lead to a sale in as many cases as it used to. Especially if the property was bought within the last few years. Some may even feel that they’d rather have the money in property than in a bank at the moment.
People who would have sold in the past may now be holding on in the hope that, even if there is a double dip, the prices will eventually recover.
If you inherit a house it may make sense to hold on to it and rent it out for a time while you keep marketing it to get the best possible price.
Those who get into debt are now finding the lenders a little more amenable (under government pressure) not to go for early repossession, leading to less repossessed stock on the market, for the moment.
When relationships broke down in the past the couple would sell the house and split or maybe one would remortgage the house in their own name to buy the other out if affordable. But now, where there may be a high loan to value (LTV) or even negative equity concerned they can do neither.
With general disposal, why sell now unless you really have to? What would you gain?
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Tags: economics, house price crash, house price news, House Prices, housepricecrash, News, residential house prices
Thing is over the last decade or so houses have become ‘investments’ not ‘homes’. And logically if you purchased a house as an investment then you should treat it that way when considering selling. No sentimentality allowed! The BEST time to sell something is not necessarily when (a) prices are at their peak but when (b) demand relative to supply peaks. (a) & (b) are not quite the same!
A house might sell well today (Nov 2009) but will it in six months & one elections time? Someone who thinks they might want/need to sell could be better off not dithering.
Run that by me again, Leo?
Why would you not want to sell at peak price?
In theory peak price is the logical time to sell BUT logically at peak price there are fewer potential buyers because by its very definition the price is at a peak . Always a difficult pricing conumdrum. Economists use the concept of ‘marginal’ revenue to explain it.
wikipedia explains it as well as any:
http://en.wikipedia.org/wiki/Marginal_revenue
An example. Suppose you have 10 widgets to sell. Due to market scarcity the potential selling price is say £10. Do you hold out for £11 and sell say one of them? Or would you be better pricing them at say £9.95 knowing you are under peak price & so your entire stock seems ‘cheap’ in the market & hopefully you should be able to liquidate them all.
Same thing aplies to housing. YOU are more likely to sell YOUR house for £99k than your competitor is to sell his for £100k
Very interesting concept Leo. That would explain why it always seems best to sell just before peak and maybe buy just before bottom?
Exactly- applies both to buying & selling.
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Hi political humorist, thanks and please do link.