A sellers market now with property scarce and prices rising
Quite often the market changes very little from one property market report to the next. However, there has been a noticeable change in the local market since our last report in August last year as our buyers market has now become a sellers market in certain areas. For numerous years now the local market has been locked into a buyers market with, not only a healthy choice of properties available, but also some excellent reductions achievable for hard bargaining no chain buyers.
In the price range up to around £400,000 the market has now changed massively as we continue to experience an acute lack of available properties throughout the Island. A healthy property market is fuelled by numerous things such as a healthy economy, consumer confidence, employment and mortgage interest rates. However, supply and demand is another very important factor to consider as, in any sales environment, lack of choice results in increased demand and therefore increased competition between buyers.
Due to exceptionally high unit numbers of sales during 2018, Manxmove are currently operating with about 28% less stock than last year and I would imagine most local agents are perhaps in exactly the same boat. With currently absolutely no shortage of no chain buyers around up to £400,000, this basically means that today’s buyers have, not only more buyers to compete with, but potentially 28% less choice than they had last year.
Consequently, competitively priced homes that are new to market can not only attract huge interest on the day of listing, but can also sometimes achieve more than one offer at asking price or in extreme cases above asking price. This is not because they have been undervalued, as market values and asking prices are reached using other carefully selected similar properties as comparables. It is simply down to the fact that choice up to £400,000 is extremely limited at the present time, and there are numerous no chain buyers patiently waiting for new listings. These buyers are fully aware of the shortage of properties in this price range and are quite rightly not prepared to jeopardise the purchase of a home by going in with an offer below asking price.
Whilst the market is extremely buoyant up to around £400,000, this is unfortunately not the case across all price ranges. The market above £500,000 is still a little slow and the market above £750,000 is slower still, with only a select few homes selling on the Island at above £1million. The market is made up of around 90% local buyers with only a handful of off Island buyers relocating to our shores. This obviously effects the higher end of the market as historically the £1million plus purchaser has tended to be an off Island buyer.
Bungalows in the East up to around £400,000 are one of the most desirable properties in the market at the present time and the scarcity of bungalows in general will inevitably result in an increase in values in the very near future. Very few bungalows are being built new by developers at the present time and this has been the case for years, hence the shortage. The last bungalow we marketed in Union Mills at £299,950 had 12 viewings arranged on it within 2 days of marketing. Consequently, the first viewer agreed to buy at asking price, therefore sadly disappointing 11 other potential purchasers.
Fierce competition between buyers is not restricted to bungalows in the East either, as we have had very similar situations with numerous properties recently including a house in Church Street Peel which attracted 5 viewings within a few days along with an offer above asking price, a detached home in Beech Close in Onchan that didn’t even make it as far as marketing before receiving a full price offer and and a property in Lancaster Road which attracted 12 viewings and an acceptable offer within the first few days of launch.
Another area of growth in the local market, again fuelled by scarcity, is the modern 6 to 10 year old 2 bedroom terraced homes on the modern estates such as Farmhill and Governors Hill. These homes are ideal for both first time buyers and buy to let investors and prices have recently risen steadily from around £175,000 to just below £200,000 in some cases.
New listings continue to massively dominate the interest at present compared with the older stock. However, we are now finding increased interest in some properties that have been on the market for some time, which is another sign of an improving market. Vendors of properties up to around £400,000 that are struggling to attract any viewing interest should have their agents re-assess their homes to make absolutely sure they remain competitive. Healthy interest at this price range exists and sales are being negotiated so a price reduction to re-position the property in the marketplace, along with a refresh of photographs and details should rekindle some interest.
The apartment market on the other hand is unfortunately still struggling as most viewers, including buy to let investors, are preferring to buy freehold houses with no associated ground rents and management fees. However, the more affordable purpose built apartments will sell if asking prices are keen, as some first time buyers on a budget are simply unable to stretch to the value of a house.
The rental market remains strong and is again struggling for stock so it is not unusual to launch a new rental listing on a Monday and agree a tenancy on the Tuesday. Unfortunately some first time buyers are struggling to save a mortgage deposit due to the high cost of rented accommodation, even though monthly it can sometimes be cheaper to buy the very house you are renting with a mortgage.
To sum up then, the market definitely seems to be changing with no shortage of willing buyers out there up to around £400,000. Unfortunately lack of choice in the lower price ranges will inevitably restrict unit numbers of sales, as you can’t sell what you don’t have. However, the consumer confidence mentioned above is definitely back compared to other years. Most vendors and purchasers that we meet have an opinion on the market and most quite rightly believe that the market is now extremely healthy, which is important.
Graham Wilson FNAEA (Dip REA)