Despite talk about housing market recovery, with a pick-up in both prices and sales, turnover has fallen so low that it is a real threat to estate agency, the mortgage industry and conveyancers, and to local economies.
Property website Home says today’s market of restricted supply and rising prices does not translate into a real recovery.
The search engine, which takes properties from virtually every source in the UK including agents’ own websites, has come up with a measurement it calls the Home Market Turnover Indicator.
This combines monthly data on overall stock levels and average marketing times from 2005 to the present day.
During the boom times of 2007, the Indicator stood at 10,000 properties a day. The flow of properties fell drastically as the financial crisis hit, but recovered to 4,000 per day in 2010.
However, over the last three years, the Indicator has shown a downward trend, with stock levels falling faster than marketing times.
Currently, the Indicator stands at 2,761 properties a day – a turnover 14% lower than in June 2012.
While there has been a seasonal upturn, Doug Shephard, director at Home, said he questioned whether current price rises really are a sign of recovery in the sales market.
He said the Indicator is at an all-time low for the time of year, indicating that the market in England and Wales has downsized by around 75% since the peak in 2007.
He estimates that on current average prices, at the current low rate of turnover, there is £656m of property value flowing through the market per day. This compares to July 2007 when close to £2.5bn moved through the market on a daily basis.
Shephard said: “Rising property values are less significant if sales activity is stagnant or falling. Hence, it is vital not to overlook the pulse of the sales market.
“Translating the daily rates of turnover into money flows helps gain a genuine perspective on the health and wealth of the marketplace. To consider that the flow of wealth at the pre-crisis peak was 277% more than today’s rates is very sobering news for any party involved in the buying and selling of residential property.
“It is not just about cash flows between financial institutions. Lower transaction rates have a very negative impact on local economies.
“Vendors spend money preparing their homes, buyers spend money post-purchase and both sides hire professional services. A U.S. study looking at how much money is injected directly into the economy puts the figure at around 17% of the property value.
“Looking ahead, the real test for each local market is: when will vendors begin to return in significant volume? The answer very much depends on the fortunes of the wider UK economy.”
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Comments
Following on...
Ampersat stated "I think once you run through the logic of both arguments you might start to realise why no-one is paying very much attention to you."
RR claimed this to be "...incredulous and unfathomable and all I would say in reply is how do you know?"
To quote from HIS OWN Bio on HIS OWN woeful blogsite -
" I have researched how to make improvements to the operation of the housing market... I have communicated my findings both to RICS and the NAEA... Neither have been willing to discuss these matters at all"
Alas this has now dropped to page 4 of the archive. YET AGAIN he ducks and dodges, ignores reasonable questions that he cannot answer without sinking himself without trace.
THIS is him 'Realising Reality'. The simple reality that he cannot hack playing with the other boys because they all can play the game better than him - and like the spoilt child he tries to grab the ball and runs away with it.
This ain't your ball, Mr RR. You haven't even demonstrated you know how to kick it.
So, THIS TIME when you retreat to lick your wounds, take some time to actually improve your game before you come back or you will simply keep coming back to be outplayed again and again.
Ampersat
Believe it or not, I have had the strange experience of agreeing with Mr RR. Once.
It's his poorly hidden agenda and methodology of going about it I find so distasteful.
The trouble is, that if he DID actually present "the way forward" for the housing market tomorrow, then no-one would believe him and his offering would receive the usual.
Sad, really. But - that is reality for you.
It is such a shame Peter won't discuss a subject that he is passionate and knowledgeable about, [underline on]some [underline off] of his ideas are not [underline on] that [underline off]daft but the way he goes about getting his point across robs him of credibility.
I was looking forward to a discussion with Peter, there is no doubt that industry influencers pick up on these discussions, tweak the points raised and make them their own, this particular topic ought to send a message loud and clear that despite what niche experts have to say (with authority and conviction) they’re not always right.
He's taking it to the wire, Ampersat!
I would take his silence as a compliment if I were you. He has nothing to offer by way of counter.
Peter, you have the rest of today, all of tomorow and about 1/4 of Wednesday to come up with something a bit better than that.
Yes, Mr RR - Happy 1st of July.
You are quick to welcome it - but I would imagine that WEDNESDAY can't come any sooner for you.
That'll be the day that this story drops off the 'Latest 30' list - and your woeful inadequacy to respond to what is the most reasonable counter to your rantings yet will disappear into the ether once again.
Lucky you!
Until the next time - which knowing you won't be long... hopefully 'Ampersat' will be keen to reengage ;o)
WHITE RABBITS!
Good morning, even to those who don't quite see the sun yet.
Life goes on.
Hopefully you can see what I mean about how you express yourself, it was you that stated; "I have tried to point this out to people right across the estate agency sector but to no avail", what on earth does that mean if it does not mean no-one is listening to you?
I have raised clear and concise points why I think the property market is stalled and responded to your accusations that it is all the fault of Estate Agents.
I have not said that Agents don't need to change but have explained why Vendors are being misinformed about the value of their property. In support of my stance I gave you an opportunity to understand what most agents have to deal with on a daily basis.
Mr Hendry it doesn’t matter how you dress it up, your failure to counter my points is a retreat. I don’t care who you are lobbying, if you fail to address the holes in your case as you have in this discussion it is little wonder you are not being taken seriously.
Apologies, Ampersat, for chipping in here...
"To say that no-one is paying any attention to what I say is incredulous and unfathomable and all I would say in reply is how do you know?"
Erm... because YOU said so, many times before, Sir!
You, in your own words, have badgered the Government; the NAEA; the RICS and all major Estate Agency chains and have been ignored. Not one of them have even bothered to acknowledge you, I think I picked up from what you have previously written. In fact, your own website states that you "...identified what are clearly 'mammoth imperfections' and developed workable solutions to resolve them. In essence, neither the estate agents governing body nor the RICS see the problems in anything like the same way and have chosen not to discuss the issues which cause exaggerated cyclical booms and slumps in the hosing market,"
and that you "...decided to resign primarily as a result of this in 2007. He is still prepared to have discussions with them."
Still waiting - after over six years!
Even in your own post below, you state "I have tried to point this out to people right across the estate agency sector but to no avail."
You simply don't know what you are saying! Time, therefore, to clam it methinks.
Mr RR - in 'Ampersat' you have met more than your match - as unlike mere mortal me, he can not only talk your language... he can give you well-needed lessons in it.
You think I am a pain, gnawing at your ankles? - watch this guy. He's a pro.
Ampersat, You were up late! I'm sorry you feel that estate agents do not need to change and evolve and that their level of professionalism if perfectly adequate. I beg to differ.
To say that no-one is paying any attention to what I say is incredulous and unfathomable and all I would say in reply is how do you know? Who are you anyway?
What I have written is perfectly plain, to anyone with an open mind on this subject.
To try and explain in more detail would serve little purpose unless there is a commensurate willingness to change position by those interested in reading my words.
Until that should happen I intend to remain available to offer more information about how to improve the housing market but shall do so primarily to those willing to meet and discuss the matter in person.
Owing to your current stance, I see no point in appraising you about the people I am talking with or what progress is being made in the areas being discussed. I am too busy to enter into any more slanging matches with those whom appear not to understand, either their own or my particular reasoning.
Peter I know you are not a stupid bloke, please could you re-post what you just said but make it a bit more legible?
Unless you are after one of the top jobs with a portal or RICS I am afraid your 290 words don't actually make any sense in their current arrangement.
The average age of reading in the UK is 14; please use simple sentences to explain why Agents would deliberately prevent transaction levels recovering when most of them are paid on a no sale no fee basis.
Explain why an Agent would market a property at an un-saleable figure, knowing full well that they won't get paid a penny until completion.
Explain why Vendors tolerate such poor advice and poor professional service.
I think that once you start to understand that there is no logical reason why any Agent [other than a Pay per month to get your property on the internet Estate Agent] would want property hanging around un- sold for months and months, racking up Advertising spend and no vendor wants to be waiting forever to move, will you start to realise the reality that the problem is not centred on Estate Agents or the advice they offer.
I have explained why I think over extension of the market is the cause of low sales volumes, you just blame Estate Agents. I think once you run through the logic of both arguments you might start to realise why no-one is paying very much attention to you.
Personally I think with your background and experience of valuation you might better spend your time looking at the errors in the online valuation tools that are giving vendors over ambitious expectations of value. Pick a property at random that is on the market that you know well enough to value and then compare what estimates of value you would have access to if you were the owner. I think you will have an epiphany when you realise that most vendors have pre-researched advice on value, and decide to move on the basis that the Internet advises their property is worth at least 50% more than it is.
I honesty think if you were spending your days deflating over hyped vendor expectations you might start to realise the reality of what is actually going on.
Realistically I think you should be banging on the door of Great George Street demanding to know why the organisation charged will professional property valuations is seemingly doing nothing to curb online valuation tools that are so obviously wrong. Goodness knows you have criticised agents for the practice but seemingly you are happy for the RICS to condone corporate firms offering advice on value that is simply misleading.
@ Ampersat:
Unfortunately, your explanation is far from watertight.
You say "Professional Hagglers will not smooth out the peaks and troughs of the market, the market is what it is and market worth is dictated by supply and demand. It is more likely that Vendor agents will add just a tad more on top of a valuation figure to account for the more hardened haggle they can expect from the buyers agent."
My reply is:
The market is IMperfect at present and the evidence for this is the lack of throughput, whilst there is simultaneous pent-up demand for house moves currently.
An excessive number of vendors are giving up on trying to sell to move, because the market has stopped flowing correctly and this is causing the market to freeze-up even more.
It's the lack of recognition of this difficulty by estate agents themselves, that is the problem.
This problem needs a great deal more thought I'm afraid.
I have tried to point this out to people right across the estate agency sector but to no avail. My conclusion currently is the body calling themselves estate agents in general does not seem to have any viable 'head'. If someone (like me for example) has development proposals to put forward, there is no-one that can receive them and answer or respond to the questions raised.
This means, in effect, that estate agency is a headless organisation running around doing whatever it sees fit in each individual branch or office.
If this description is correct, this does not auger well for anyone wishing to rely upon the services of estate agency these days.
I stand waiting to be corrected and trust that estateagenttoday is a viable conduit for raising such issues nationally.
Ampersat...
And to think I actually thought for a few short hours that ''you' were 'him'!
Schoolboy error. I will write 200 lines:
"Assume nothing. It only makes an ass of me."
Mr RR - read what this chap has written VERY carefully.
He has condensed what you have apparently failed to learn in your three-plus decades in the industry into a few seconds' worth of reading.
Given his age, he is allowed to say what he likes. Whether ANY of it makes sense is of little consequence.
This one is just another idea that makes sense in his head and possibly in practice; having a professional haggler paid by the purchaser could have merit and in many cases I can see a lot of agents preferring a professional, no sentiment, no nonsense, negotiation. The big trouble is convincing; not the Agents, not the vendors but the applicants that they need to shell out a fee to their buying agent. Most applicants reckon they can haggle and will want to save the X% commission or £X fee. With neither the want nor need to employ someone to act on their behalf very few applicants will bother.
Professional Hagglers will not smooth out the peaks and troughs of the market, the market is what it is and market worth is dictated by supply and demand. It is more likely that Vendor agents will add just a tad more on top of a valuation figure to account for the more hardened haggle they can expect from the buyers agent.
The problem of sales volumes is not going to be solved by any minor tweak to the way the process of buying and selling happens. There is a fundamental problem that 1st Homes are ideal investment properties, this creates high demand for starter homes , keeping prices above the means of most FTB’s, thereafter the market is over extended, the gap from a 2 bed starter to a 3 bed 2nd step family home is too wide but necessarily so because of the gap to buy a detached version of the 2nd step family home and so on up the aspirational chain of property.
My own view is that the market is changed for the time being and only when the economy sees a bit of inflation and a rise in interest rates will there be any impetus for Sales volumes to rise. I am afraid I would raise interest rates and then deal with the consequences.
Realising Bot All -
Thank you for giving me the opportunity of continuing my fixation with you. I will freely admit to 'missing' your MDT somewhat - loosely speaking, in the same way that the guy on the telly with the ten-stone cojones undoubtedly misses hauling those puppies around in a wheelbarrow now that they have been 'normalised'...
Anyways... back to the billshut. Thank you for at least daffing it up as if it isn't a blatant cut'n'paste from your woeful blog - which by the way at least LOOKS a little better these days. Did Phil Spencer recommend the new wallpaper? You give him more plugs than the electrical department of the Co-Op these days - are YOU fixated on HIM, perchance?
Below, you say "The way to get sales volumes happening is to allow buying agents to become fully accepted, working in competition with existing estate agents."
They do. You're a bit behind he times on that one, Sir. Your idol was one. He failed, apparently - IN A DECENT MARKET! That Pryor chap is one. He also grows his own sausages and bacon - so maybe he isn't doing too well on the 'buyers agent' front, either. I don't know - but he's been awful quiet on here recently.
Suggest you ask yourself the following questions:
"Why don't buyers USE buyers' agents?"
"Why don't people BECOME buyers' Agents?"
"Why don't people READ my woeful blog?"
No doubt YOU will need further detailed explanation as to the answers. You always do. Of course I am willing, as always, to point you in the direction of TRUE 'Reality' - however you ignore my directions and bimble off completely the wrong way, Sir.
(If you are REALLY lucky, the '@' chap will give you the benefit of his considered opinion on your latest rantlet. I'd LOVE to read his slant on your 'work'!)
Keep smiling! ;o)
'@' bloke...
Don't panic, Sir - I'm still vertical and breathing on my own! ;o)
As far as the response to 'himself' - well... lets just say I'm working on it!! Lots of MDT to wade through there, don't you think? ;o)
We ignored to Octogenarian post on the other thread too.
I am concerned for Peebee though he would normally smell this and seek it out, I do hope he is ok.
We seem to have got there at last. With his normal high standard of cobblers a post from old RR at just after 8am and not a sausage in the way of responses come 6pm (ish).
Good work everyone.
Jonnie
So, the housing market recovery is threatened by low volume sales?
Well the government are doing a good job by repealing the Property Misdescriptions Act and relying more on consumer protection but a further change for the better is required to help the housing market to recover its former volume level. It's a change to improve the way the market operates.
The 'industry' needs to improve the way 'choices' between the properties currently available on the market can be made. How?
By completely changing the marketing methods of estate agency from acting from the seller's viewpoint (as now), to the majority of them acting for buyers. By offering a complete and corporate service to all those buying, the future stability of the whole housing market would be assured. I know this seems to be a big life-style choice for many agents but change needs to come from within the industry, and is long overdue.
Valuing the buyers' side of the bargain needs to be addressed in a more even-handed way than previously. However, this does not mean finding more ways to help them borrow more to pay more! They should instead be professionally represented, at least as much as those wishing to sell are currently. Opportunity knocks for the first agents interested in taking up this particular challenge.
The way to get sales volumes happening is to allow buying agents to become fully accepted, working in competition with existing estate agents. If you don't believe me ask Phil Spencer and friends! The effect of this would be to smooth the humps and troughs in the housing market and reduce or even eliminate future slumps in levels of transactions in the housing market by allowing the market to function more 'perfectly' in all states of this great nation's economic cycles. Exactly why and how this can happen needs a detailed further explanation.
Sure, the changes in legislation which are being brought forward this autumn will help, but the additional measures suggested would help the industry, not only to comply, but to grow too.
For those interested in knowing more about exactly how this might be achieved you can Google the Property Match UK blog, see the arguments in favour of the need for change from within the industry clearly and fully set out and even more importantly, post your further comments to these new proposals.