A sellers market in certain price ranges at last
Well, the local property market has certainly changed somewhat since our last property market report at the beginning of the year.
Having been in this profession locally for more years than I care to remember I have obviously experienced good markets as well as bad. In the hectic sellers market of over 10 years ago now purchasers were literally buying properties over the telephone unseen, whereas over the last few years some vendors have sometimes struggled to attract viewings, let alone offers.
Our market has been locked into a buyers market for several years now and consequently prices have contracted as a result of this lack of activity. However, the local property market is changing and for the first time for a long time some sections of the market are now stacked in the sellers favour.
If you are trying to sell either a high value apartment or a property above £500,000 you could be struggling to attract interest and the further above £500,000 you go, the harder it tends to be to attract viewers, as this section of the market is still very much a buyers market. Invariably, properties above £1million historically tend to be purchased by off island clients and, whilst there is a noticeable increase in new residents at this level, it is unfortunately not unusual for some homes to be on the market for over a year waiting for the right buyer.
However, if you are selling a house or bungalow up to around £450,000 in the East that is new to market be prepared for some very healthy interest indeed over a very short period of time. This is because the market in this price range is definitely now a sellers market due to a massive shortage of stock. Due to an increase in sales Manxmove are around 28% down on stock levels as compared to last year and I would imagine other agents are probably similar. Consequently, this shortage of available property is resulting in a substantial increase in competition between buyers and subsequently a hardening of prices.
It is therefore not unusual for competitively priced new listings in this price range to result in instant interest and sometimes even a bidding war between purchasers. This obviously means that a lot of new listings are rapidly achieving asking prices and in some cases even in excess of asking prices.
We recently took instructions on a three bedroom bungalow in Onchan and, due to a “coming soon” pop up on our website, we managed to arrange two viewings at the same time I was measuring up to produce property details. This property then achieved over £10,000 above asking price before I had time to even download the photographs, let alone launch it on the website.
This supply and demand situation has also resulted in us selling several properties over the last 6 months by a sealed bid situation. This is when no chain interested parties are invited to place their best offer in writing by a specific day and time with the highest offer received by the deadline being successful. These transactions almost always achieve above asking price also, which will inevitably lead to future price rises as Estate Agents and surveyors tend to value using comparable sales data.
Don’t get me wrong, this is presently happening in one section of the market only and it does tend to apply to new listings, as numerous purchasers have exhausted the current stock and are therefore patiently waiting for new listings to come to market.
There are inevitably still a lot of vendors out there that are not experiencing this interest and, if they are in this popular price range, my advice to them is to get their homes re-assessed by their agents as transactions are definitely happening in this area of the market. It may well be that an amendment in the price and a refresh of the details and photographs may rekindle interest.
A sellers market in any section of the market is certainly something we have not experienced for years though so it shows that the market is definitely changing.
The rental market is also short of stock, particularly in the East up to around £1500 per calendar month. As I write this report the only rental properties that we have not found tenants for are a few apartments in Ramsey. Everything else on the rental side of our website is Let Agreed so we are also desperate for rental stock. Consequently, if you are considering renting your property please let us know as we are presently negotiating some superb rental rates due to this shortage of choice.
So, the market has definitely shifted this year, the future looks more optimistic and, in my opinion property values will certainly increase in the above section of the market where we are experiencing shortages. Unfortunately, unless stock numbers increase dramatically the scarcity of local homes will prevent a substantial increase in unit sales.
Eventually the activity at the lower end of the market should knock on up the price ranges as vendors moving up achieve healthy prices for their homes due to the shortage. The ideal scenario would be a vendor selling at around £300,000 and purchasing at above £500,000 as it is very likely that, due to the market split, asking price or close could be achieved on the sale yet some negotiating is likely on the purchase.
Mortgage rates remain low, for the time being anyway so, with rental values high, in many cases it is just as cheap to buy the same home as rent it, providing you have a deposit and mortgage in place of course.
First time buyers are important to the health of any market as they obviously kick start chains of activity further on up the price ranges. Thankfully there are also presently a lot of first time buyers out there keen to get on the property ladder as they quite rightly know now is a great time to buy.
Investors remain keen to invest in the local buy to let market due to the buoyant rental market income compared to comparatively low interest rates presently offered by banks to savers. These investors tend to buy modern 2/3 bedroom homes in the East on the modern estates, which is also fuelling the property shortage problem at present. I believe one of our competitors recently sold a 2 bedroom home in Governors Hill for over £200,000, which really is breaking new ground in my view. Last year some of these properties were changing hands at £175,000. This again is a good yardstick to confirm that the local market is on the move.
A very interesting market indeed then with absolutely no shortage of willing buyers out there, particularly in the lower price ranges, and I honestly believe the only thing stopping a huge increase in market activity and unit sales is the lack of stock and lack of off island buyers. The latter may well change in the near future too depending on the outcome of Brexit which may well bring more new residents to our Island.
Graham Wilson FNAEA (Dip REA)