When it comes to buying and selling property, pricing is crucial. The latest housing insight report from Propertymark tells us that, whilst the gap between the seller’s asking price and market expectations is narrowing, it is still significant. The data shows that nearly 80% of all private treaty transactions are selling for less than the asking price, in comparison fewer than 10% of properties are selling in excess of the asking price, further solidifying why accurate pricing is so important.

The impact of inflation

We saw CPI inflation rise from 1.5% in April 2021 to 11.1% in October 2022, which is a huge increase, only for it to fall dramatically back to 2.3% by April 2024. This left both households and businesses struggling to cope in the face of increased costs due to inflation and the impact of the accompanying rise in interest rates. With the end of 2024 now in sight, rates appear to have finally settled at 5% and we expect this to stay stable for the foreseeable.

Whilst inflation has come down, prices are still increasing, albeit at a slower rate. and this has impacted the housing market on both a macro and micro level. CPI inflation was higher than wage inflation between April 2021 and June 2023. This resulted in the property market being largely supported by what are termed as “necessity sellers” (e.g. those vendors forced to move due to divorce, debt or death), cash-rich buyers or buyers with large deposits.

Fragility in the market has been created by these interest rate rises, with sellers delaying moves, buyers pulling out of transactions, or renegotiating prices, all of which have left estate agents to deal with lengthy transaction times and increased market uncertainty. If you’d like to read more about how online auctions can help prevent sales from collapsing, take a look at our recent blog post: How Online Auction Platforms Can Help Prevent Fall Throughs.

Supply is increasing

Signs of renewed activity is starting to appear in all sectors of the property industry; conveyancers, estate agents, mortgage brokers and removal companies. A 14% increase in the number of market appraisals being carried out by member branches was reported by Propertymark in its April 2024 Housing Insights Report. Agents also experienced a 20% increase in new property instructions on the month before. The average number of new prospective buyers registered per branch also increased to 88 in April 2024. It is worth noting that this is the highest number in the last 12 months. With supply to the market steadily increasing, accurate property pricing is even more critical.

The impact of transaction times

The increase of transaction times in recent years, has been felt throughout the industry. Whilst some of these increases could be attributed to external influences (such as COVID), reduced workforce capacity and streamlined services, transactions times have continued to rise despite various initiatives and technologies promising to tackle the issue.

In 2017, transaction times were approximately 10-13 weeks, but by 2022 they had risen to a staggering 22 weeks. Currently, average transaction times are now closer to 26 weeks, which highlights the fact that the problem is only getting worse.

It has therefore never been more crucial to get pricing right to ensure that transactions are fast and certain. With it taking 62 days on average to find a buyer before the legal process can even begin, it’s worth remembering that properties which do require a price reduction take three times longer to sell than those that don’t. If that’s not an incentive to get your pricing right from day one, we don’t know what is.

The power of auctions

In a market where estate agents face rising costs and downward pressure on fees, cash is key and the ability to earn fees faster has a huge impact on an agent’s ability to grow and take advantage of a market that is starting to show signs of recovery.

With auction transaction times of around 5-6 weeks on a consistent basis, auctions are providing a tried and tested solution to this issue. As auctions rely on the upfront preparation of legal documents and defined bidding time frames, transactions are able to complete much more quickly. This means that if an estate agent is instructed to sell by online auction on 1 January, they will receive their fee on 5 February. In contrast, if an estate agent has an offer agreed on a property as a private treaty sale on 1 January, they will have to wait until 1 July to receive payment of their fee. With stats like these, it’s easy to see why sale by auction is experiencing a resurgence.

With buyer appetite increasing, more and more agents across the country are turning to the auction market as a catalyst for renewed growth, helping time sensitive sellers achieve the best possible prices for their properties in the shortest possible time frame. If you’re looking to reduce risk, lock in commitment and help eliminate sales falling through, get in touch with us today to speak to one of our experts.