As the initial furore over Brexit dies down, things remain far from normal in the housing market. This might work in favour of the potential buyers, but not if they’re expecting sellers to accept very low offers.
It might come as a surprise that UK home sellers aren’t willing to accept any offer they can get at the moment, but they’re probably right to stick to their guns. That’s because even though there’s so much uncertainty being felt by consumers, lenders and investors, there are still too few properties coming up for sale so demand for the ones that are available remains relatively high.
Also, there are still rather a lot of people who want to buy property in the UK. There are still first-time buyers with a big deposit, there are still plenty of buy-to-let investors who, if they buy at the right price, are keen on increasing their portfolio of property and, in response to the weaker pound, there are still plenty of foreign investors who continue to see the UK as a safe haven, just a bit cheaper than it was pre-Brexit.
According to the latest housing market survey from the Royal Institution of Chartered Surveyors, the largest proportion of surveyors reported a fall in new buyer inquiries during June since mid-2008. The survey also shows the number of home sales agreed in June fell for a third straight month, and looking ahead the biggest proportion of surveyors since 1998 expect prices to continue falling over the next three months.
The bad news doesn’t end there. Surveyors are now also expecting a drop in sales over the next 12 months for the first time in four years.
“Anecdotal evidence suggests that uncertainty relating to the European Union referendum results was the primary driver of the slump although the higher stamp duty rates at the upper end of the market also continue to weigh on demand,” the RICS said.
However, amongst all the bad news on the demand side, the supply side is just as weak, if not more so. The fundamentals behind high prices for UK homes is that there haven’t been enough homes for the people who want to live in them and buy them for a number of years now.
“Though we cannot rule out price falls in some weaker markets or in the event of a more substantial economic shock, we believe prices will fundamentally be underpinned by a continued low interest rate environment and low supply,” London estate agency Savills said in its recent report: “Brexit’s Impact on the Mainstream Market.”
So, while there does appear to be some wiggle room for buyers to make a below asking price offer, if they go too low, they risk losing their dream home because, where well-priced and well-located property is concerned, there’s almost always another buyer.
“Many sellers are pulling out on buyers who automatically ask for 10 per cent off the asking price because of Brexit,” an estate agent who didn’t want to be named told City A.M. “Proud homeowners won't automatically sell way under the asking price, so be sensitive in negotiations.”
Now could be a good time to have a below asking price offer accepted – just don’t go too low.