UK Housing Slump Gains Momentum as Properties Fail to Sell at Auction
Housing-Market / UK Housing Dec 02, 2007 - 11:15 AMBy: Nadeem_Walayat
Home owners failing to sell properties through the traditional estate agency route are increasingly opting for the chance of a quick sale offered by Auction houses up and down Britain.
However the number of sales being achieved at auctions has plummeted, even after worried sellers rush to accept offers prior to the auction. The resulting supply overhang will result in further sharp falls in the housing market that will accumulate over the coming year as home owners price expectations are behind the housing curve and are forced to repeatedly cut prices.
So not only are auction houses seeing properties selling for far less than just a few months ago, but the auction route no longer offers the near 97% certainty of the property being sold which existed earlier in the year.
As an example of the results from a typical northern auction house in the city of Sheffield on 6th November 07, compared with earlier auctions during the year.
| Properties At Auction | Jan 07 | April 07 | June 07 | Nov 07 |
| % of properties Sold | 79% |
66% |
65% |
49% |
| % remaining unsold (failing to achieve reserves) | 3% |
23% |
23% |
27% |
| % Sold prior to auction | 11% |
4% |
0% |
17% |
| % Sold afterwards | 0% |
4% |
6% |
4% |
| % Withdrawn Prior to Auction | 8% |
4% |
6% |
2% |
| % of Total available properties Sold at auction (excluding withdrawals) | 97% |
76% |
76% |
71% |
The auction results clearly illustrate the deteriorating trend in the ability of sellers to sell properties, despite cutting back on reserve prices. Back in January 2007, sellers clearly had the upper hand and could achieve prices in excess of their reserve with only 3% of properties remaining unsold at auction. The situation has now deteriorated to the point where approaching 1/3rd of properties remaining unsold, this despite sellers more eager to do a deal with buyers prior to the auction so as to ensure a sale.
If the situation has deteriorated in the auction houses to this degree then the position with estate agencies must be dire at this point in time which supports my view that the next financial crisis to hit the housing sector will be amongst the estate agencies.
As mortgages dry up from traditional sources such as Northern Rock, Alliance and Leicester, Bradford and Bingley and Paragon so will the ability of buyers to secure financing seeking to pick up potential bargains amongst panicky sellers. Throw in an anticipated 80,000 of repossessions during 2008 means a lot of supply will over hang the UK housing market by the end of 2008 ensuring that the housing bear market will persist well into 2009 despite cuts in UK interest rates and a decline in house prices during 2008.
UK Housing Market Forecast for 2008-09 - As of 22nd August 2007 |
||||
UK House Prices to fall by 15% over two years, falling prices to be accompanied by cuts in UK interest rates. (22nd Aug 07), |
||||
|
By Nadeem Walayat
Copyright (c) 2005-07 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.
Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.
Nadeem Walayat Archive |
Comments
Post Comment (Moderated)
