I was having an interesting chat with a client in Highwoods the other day, when he asked me the difference between asking prices and property values and why it mattered.
When it comes to selling a property, there has to be agreement between the buyer and seller (vendor) for a property sale to take place. The value that a buyer applies to their property can differ greatly from the value that a vendor or the lender’s surveyor places upon it. The seller, the buyer and the lender must find an agreeable value to assign to a property in order for a sale to proceed.
In my articles about the Colchester property market, I have spoken about values, i.e. what property in Colchester actually sells for, but I haven’t spoken about asking prices before. Asking prices are important because they are one of the four key factors that a potential buyer will judge a property by. (The others being location, bedrooms and type). If you pitch the asking price too high you run the risk of putting off any potential buyers. So let’s take a look at the actual data for Colchester.
During the past 12 months asking prices (i.e. the price advertised in the papers and on Rightmove, Zoopla etc), in Colchester have increased by 17%, increasing the average asking price in Colchester to £289,500 compared with £246,900 just twelve months ago.
Interestingly though, when we look at either semi-detached or terraced properties, a slightly different picture appears. Twelve months ago, the average asking price for a semi-detached house in Colchester was £232,800 and today its £277,000. A whopping rise of 19% ! Whilst over the same 12-month period, the average asking price for a terraced property was £208,600 a year ago, and today its £244,000 (a rise of 17%).
In December 2015, there were just over 700 properties on the market in Colchester, whereas there are currently 647. (A decrease of 8%). So home owners wishing to sell will need to be mindful of how their property compares with others in the local market. The Colchester property market still has substantial momentum and sufficient demand remains to provoke more modest asking price rises. A significant reduction in available stock since Christmas has resulted in less choice for buyers and is therefore tempering asking price rises.
… And here is the second point to make. Asking prices are one thing, but what a property sells for (i.e. value) is a completely different matter. These are the average prices achieved (i.e. what they sold for or the average value) for property in Colchester over the last 12 months…
- Overall Average £257,600
- Semi-detached £241,300
- Terraced £208,600
From this graph you can clearly see that there is a difference between asking prices and actual selling prices. With the underlying fundamentals of low interest mortgages and tight supply in the Colchester property market, the number one lesson has to be that if you want to sell, price your property realistically.
If you’d like to have an informal chat about any aspect of the Colchester property market please feel free to call me on 01206 862288 or email: firstname.lastname@example.org
I’m happy to provide free feedback on any investment property you may be considering. If you send me the hyperlink to the property from Rightmove or Zoopla I will usually respond within 24 hours. I am also happy to undertake free pre-purchase visits to your short list of potential properties to provide a valuation.