I’m sure that where I live we are still waiting for The Ripple Effect to arrive, but rumours of it being on its way seem to have been enough to encourage estate agents to top-load the prices of properties coming onto the market.
If you’re not sure what I mean by ‘The Ripple Effect’, in previous housing market recoveries it seemed as if prices have first recovered in London and then have increased outwards away from London, like ripples on a pond when you throw a stone. My recollection is that in the late 1990s/early 2000s it took about 4 years to see rising prices spread to the north east after they had started rising in London.
I have alerts set up on Rightmove which tell me when new properties come onto the market, just in case an investment property suitable for my buy to let portfolio comes along, and so I watch the market in my area carefully. It seemed that, almost over night, properties which I would have expected to have come on to the market for, say £60,000 were being offered at £70,000. At first, when I saw the first few, I thought it was fluke, perhaps agents or vendors being greedy. After a few more I could see that a new ‘normal’ was being established in the market.
When I was out on a viewing the other day with a trusted estate agent I asked her what her take was on this. I opined that all agents seemed to have added £10,000 over night to the asking prices of properties coming onto the market. She was a bit cagey about that but did say that for the last couple of months they’d been routinely selling at full asking price, and with a much shorter time scale, often within a week of putting the property on the market.
If this is the case, why am I not convinced that The Ripple Effect has fully arrived? Mainly because of the number of Rightmove alerts showing properties with reduced prices. This suggests to me that some agents have got a little ahead of themselves, in the case of some properties. Also that where I live, and I’m not anywhere close to London or the South East, that we are now in a betwixt and between market; we know it’s going up but it hasn’t quite the strength of the market further south. No doubt this will change over the next few months. If asking price is being achieved for most properties it’s only a matter of time before prices increase.
In the meantime it’s still possible to watch the market carefully and for a property investor to make his or her move when a price is reduced to see if they can find a buy to let bargain.