Tuesday, September 18, 2007

Rightmove: is London falling?

Figures revealing the ‘largest monthly fall in asking prices' since the survey began claim to reveal that London 'fell' by an earth-shattering 2.5%.

An earth-shattering two-point-five.

But don't worry too much... as TheBigRetort reveals, the so-called experts have got it wrong - again. (Caveat follows: For now at least.)

Relatively few new instructions took place during the time that the figures cover; August is a month for holidays not usually given to slogging under the eaves.

To be sure the Rightmove report acknowledges this – but then ignores it.

So why is Rightmove using its data to shoot at the HIP?

Apparently rightmove isn't alone in singling out the introduction of HIPs as a major contributory factor… “The drastic fall of 41% in new instructions for detached houses illustrates the impact of HIPs,” one expert reports.

But is this the case?

Such statements, given the admission that these figures cover the holiday season, seem suspect. Detached houses are not kept from sale due to the cost of a £500 HIP alone - if at all; but for other more mundane reasons.

The need to get the family holiday out of the way before buying and selling is one; in addition, and curiously, some of the detached houses referred to above like as not were placed on the market before the HIP itself came into effect; providing a property was marketed before that date a HIP does not apply - a troublesome point for Rightmove surely.

So why is it then that the ‘experts’ are claiming that HIP regulations and the turmoil in the world financial markets are behind the dramatic slow down?

What dramatic slowdown - 2.5%?

And add this to the mortgage pie… The Northern Rock liquidity debacle only came to light after the Rightmove figures were compiled - no reliable indicator there then.

In fact, the real lime in the mortar of the Rightmove figures I suspect are the estate agents and their asking prices (EAAPs for short); which should not be confused with seller expectation prices. The latter of which Rightmove seems oblivious.

And who compiles those SEPs? (I love doing that.)

Why those crafty estate agents of course. Not only do they understand that August is a dry season (not weather wise I hasten to add) - a time when most buyers are away, a time when few properties become actively marketed, and a time when an estate agent says, ‘If you’re not in a hurry let’s test the market’ - but also a time when they say we'll overprice slightly to get you what you want.

And test and overprice they do… With estate agent asking prices set above seller expectation prices (SEPs) in order to negotiate down, not up! - after all this isn't Scotland - everyone's a winner babe.

So how high do estate agents usually set the EAAP in a slow market?

TheBigRetort has compared its own 'data' using what it calls the Charlotte Ultimatum (nothing to do with Bourne, she's knows who she is - my estate agent) and can reveal that this is usually between 2%-2.6% above the seller's expectation.

So there.

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