Property Advice

Wednesday 7 March 2018

Hampstead Homeowners: The Perils of Overpricing



As a vendor, naturally, you want to achieve the best price possible for your home. It’s normal to get the opinions of the three local estate agents about the price and go for the highest quote. In truth, overpriced homes will always sell for less and take considerably longer to sell. Here are the 3 things to bear in mind.

1)    Buyers make their decisions based on emotion and intellect. As much as they may like your home, they make comparisons with other offerings in the local market. Why should they buy your house if it’s more expensive than a comparable alternative? ..... It makes either practical or economical sense. Your home will languish on the market, with little interest shown until such time all the similar homes have sold. By that time however, it may have gone “stale” due to over exposure in the market.

2)    When your home is first listed, the highest level of interest will be within the first 3-4 weeks. An overpriced home will prevent serious purchasers form registering their interest that will focus on other similar alternatives. This is a missed opportunity to attract the interest and attention of purchasers who may well be in the buying window. The trade off is time vs. footfall. The more buyers that view, the competition between them will drive price up as where time will drive it down.

3)    Sellers who say they are “open to offers” often set themselves up for failure and disappointment. The fact is, fewer purchasers will view the house, and therefore the chance of an attractive offer is fairly remote. Overpricing attracts attention form the wrong type of buyer with unrealistic expectations who is unlikely to offer in any case. People’s emotions play a big part in the buying process and what the are willing to pay. Correct pricing is essential, as trends show that serious buyers tend to purchase at the top of their budget. Therefore, the pool of buyers for your home will be looking in a lower price bracket not a higher one. These are the people that you need to attract not repel!
Intense buyer activity in the early stages of marketing is what will secure the highest price and here at Ashmore Residential our job is to bring about the best results possible. In essence, realistic pricing and good presentation will make your home competitive and attract buyers who are serious and committed. Your home is being offered to the market in competition – not in isolation to others.  The right strategy from the onset will save you time and make you money. 

Thursday 1 March 2018

51.3 % Fall in Hampstead Homeowners Moving Since 2007


Last Sunday morning I was reading the papers and came across an article in the Financial Times. It was talking about the Government’s ambitious Housing Scheme announced in the Autumn Budget and how it will address the lack of new homes being to help the first time buyers market. Other touch points were how the affordability of homes was getting further out of reach for many and how the stringent mortgage rules brought in 3-4 years ago have added to the plight of the aspirational home owner. My thoughts were then directed towards those existing homeowners who can’t move and that they face the possibility of being caught in a housing trap.

Back in the early 2000’s, between a million and 1.3 million people moved each year in England and Wales, peaking at 1,335,166 home-moves (i.e. house sales) in 2002. However, the ‘credit crunch’ hit in 2008 and the number of house sales fell to 642,111 in 2009. Activity has increased steadily since albeit to a more ‘respectable 895,674 properties by 2017. This means there are around 440,000 fewer house sales (house-moves) each year compared to the turn of the millennium. The question is why are there fewer house moves?

The answer to this lies in history. From the late 1960’s to the early 1980’s the Economy was marred by high inflation. Governments of the time raised interest rates in response to curb inflation and get it under control. Higher interest rates meant the householder’s monthly mortgage payments were higher, meaning mortgages took a large proportion of the homeowner’s household budget. Although it appeared homeowners had a millstone around their necks, high inflation eroded mortgage debt, thus increasing their spending power in real terms. Wages had increased significantly during this period to keep up with inflation enabling home owners to obtain bigger mortgages. This allowed them to upgrade from the two bedroom flat to the three bedroom semi and then onto the four bedroom detached. Fundamentally, the erosion of mortgage debt meant higher levels of equity could be relapsed enabling home owners to move up the ladder quicker.

See the graph below that illustrates the slowing trend over the past 10 years.
(Source- Office of National Statistics)


Moving into the 1990’s and the Millennium, interest rates and inflation fell to all time historic lows, meaning homeowners had even more equity to release. The boom in UK house prices from the period 1997 to 2007 was astonishing. Banks and building Societies slackened their lending criteria to a degree that is now regarded as grossly irresponsible in today’s market place. The financial markets were awash with money; the cruel irony was that homeowners were biting off more than they could chew. This had a significant impact on the housing market and the economy in the coming decade.


The Bank of England only recently raised rates to though they are still at record low levels in their 400 year history. Based on this, it would be a fair assumption that the number of people moving would be at an all time high. In reality, the opposite is true, below are the main factors.
(1) low wage growth of 1.1% per annum,
(2) the tougher mortgage rules since 2014
(3) sporadic property price growth in the last few years
(4) High property prices compared to wages
what does this translate to in pure numbers locally?), all these four points have come together to mean less people are moving … but by how many?
In 2007, 12,584 properties sold in the London Borough of Enfield Council area and last year, in 2017 only 6,127 properties sold – a drop of 51.3 %.

Therefore, we have just over 6,450 less households moving in the Hampstead and surrounding Council area each year. Now of that number, it is recognised throughout the property industry that some 80% of these homeowners are encumbered. That means there are around 5,160 mortgaged households a year (80% of that figure) in the Hampstead and surrounding council area that would have moved a decade ago, but wont this year.
A recent report by the Council of Mortgage Lenders (CML) has shed some light on this and I have broken this down into four categories.
So, of those estimated 5,160 annual Hampstead (and surrounding area) non-movers, based on that CML report –
1. There are around 2,600 households a year that aren’t moving due to a fall in the number of mortgaged owner occupiers (i.e. demographics).
2.  Approximately 750 households a year are of the older generation mortgaged owner occupiers. Older homeowners are less inclined to move.
3. 500 households of Hampstead (and surrounding area) annual non-movers will mirror the rising number of high equity owner occupiers. Now cash buyers.
4. The remaining 810 or so mortgaged homeowners that are unable to move because of the restrictive lending criteria introduced back in 2014 for those who need to obtain larger mortgages – especially true in Hampstead where house prices are 5 times that of the London average.
 In the main, reasons of lifestyle and demographics are factors the Government and Bank of England have little influence over. However, it’s the final category of people that could be helped. If average values were lower, it would decrease each step of the property ladder.
In turn, this would enable the upgrading trends that we saw a generation ago, where the affordability gap is narrowed and people can move to more desirable homes and or areas.

Whilst the criteria has changed for those requiring bigger loans has somewhat subdued buyer activity, the past culture of banks and building societies has changed the landscape for the foreseeable future. 

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