How do you know that the property market is a sellers' market and how can it help you?

Posted on Monday, May 16, 2022


You may have heard estate agents, or even on the news, saying it's a 'seller's market'.

 

But what does that actually mean?

 

And how can you tell that it's a sellers' market?

 

More importantly, how can this help you?

 

Like any market, the property market goes up and down, with peaks and troughs.

 

But how does this happen?

 

It's primarily due to supply and demand.

 

Suppose hundreds of properties are available for sale, and only one or two buyers are looking to buy. In that case, it is a 'Buyer's Market'. 

 

That buyer has their pick of properties. The sellers are all vying for their attention and competing to get the offer, usually offering price reductions or heavy negotiations.

 

The buyer has the potential to play the sellers off against each other. They can decide which property to offer without worrying that the one they want might sell to someone else. 

 

And when they do finally choose and make an offer, they're in the driving seat. The seller needs' their offer more than the buyer needs that property.

 

So, savvy buyers will negotiate hard.

 

The offers that they make could be eye-wateringly low.

 

And usually, the most desperate seller will accept this low price.

 

The seller finally gets a sale, at any cost, and the buyer has got themselves a bargain.

 

But, if the roles are reversed, we see a 'sellers' market'.

 

There are currently around 50% fewer properties available for sale than usual in the UK. 

 

That means significantly fewer properties are available for a buyer to choose from. 

 

And there are lots of buyers looking to buy.

 

In fact, for every property for sale in the UK, there are approximately 20 potential buyers!

 

That means that demand is way higher than the available supply.

 

Sellers can ask for higher and higher prices for their properties. The most 'desperate' buyer will pay a higher price to secure the property they want and beat off the competition from other buyers.

 

In theory, a seller can hold out for the top price because there are so many buyers to choose from. Whereas in a buyers market, often sellers are just happy to have received an offer and have to reluctantly accept whatever they can get for their home. 

 

A seller's market puts the SELLER in control of the situation.

 

They're in the driving seat and can accept or decline whatever offers they want. There will likely be another buyer just around the corner for them anyway.

 

So, how do you know that we are in a seller's market?

 

  • There are more buyers than available properties.
  • There is very high demand but a low supply.
  • Viewings are booked as soon as a property is listed.
  • Offers go over the asking price as buyers fight against each other to 'win' the property.
  • Money talks - whether it is very high offers or a cash buyer's ability to complete quickly. The certainty of the buyers' circumstances will come into play. A cash buyer will be a more attractive option than a buyer with a property to sell, especially if that property isn't on the market yet. Perhaps this could lead to even higher offers as people negotiate for more time to allow them to sell their own property or obtain mortgage funds. 

 

Most importantly, how can this help you?

 

Clearly, if you're looking to sell your home, it's excellent news. You're likely to get a great price for your property and probably won't have to be on the market for very long.

 

But what if you don't want to sell your home just yet? Do you even care what the housing market is doing? Can't you just ignore it until you decide to move?

 

  • If you're not looking to sell, you could release some equity as the value of your property will have likely gone up.
  • You could use this equity to extend your home or perhaps pay off some other debts to free up a bit of monthly cash?
  • Perhaps you could look at releasing some equity from your home and investing that money elsewhere to benefit from the rising interest rates? Perhaps into a stocks and shares ISA or some other financial investment?
  • Maybe you could release enough equity to purchase an investment property? You could supplement your income with the additional funds generated from a rental property. Particularly at the moment, the rental market has very low levels of available property. This means that rental prices are increasing as tenants have to fight to find a property to rent. If you purchase an investment property, you'll provide a home to tenants struggling to find somewhere. Also, as the market rises, your equity in both properties will increase. So you'll get the benefit of capital appreciation for 2 properties now instead of just one! When creating a secondary income from property, there are many tax implications, so please seek proper advice.

 

A sellers' market is obviously good news for sellers, but if you're a homeowner, it can be great news for you, too, even if you're not looking to sell your home just now.

 

If you want to discuss your options, whether you are looking to sell or perhaps remortgage your property, give us a call! 

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