The hot topic in the newspapers and in the media generally over the last few months surrounds “predictions for the property market in 2009”.
The Press seem to have no other options than to speak to the various estate agents for their predictions. The usual suspects are all asked their thoughts. The general consensus amongst these estate agents seems to be the property market will fall anywhere between 15 and 30 per cent in 2009. Obviously no-one has a crystal ball and these estate agents can only guess what is likely to happen. That being said, it is worth questioning whether estate agents have an agenda in painting a worse case scenario. “How so”? you may well ask. “Surely if they are painting a bad future then there will be less buyers inclined to purchase. ” On the surface, you may be right. Let us scratch beneath the surface a little bit.
A few years ago, one of the best agents I have worked with in my fairly lengthy career, phoned me up and admitted to me that the current market climate (this was in approximately 2001) was bad. I expressed surprise as there was nothing in the Press about the property market collapsing or about to deteriorate and on the conveyancing side of things, we seemed to be relatively busy. I said that the market seemed to be holding up well. He claimed it was very hard for him at the moment because the market was static. I asked him to elaborate. He went on to explain that a static market is the worst market for an estate agent. An agent actually prefers buyers and sellers to know exactly where they stand. In other words, an agent prefers either an obviously falling market or an obviously upward market. In an upward market an estate agent can convince the buyer that if he misses out on this deal or does not make an offer or is too indecisive then the next deal will cost him a lot more. In a downward market it is easier to convince the sellers to accept a low price because one can paint the picture that in six months’ time there is a strong possibility that he would achieve even less.
Call me an old sceptic, but whenever I now read articles in the voicing estate agents predictions of a falling market or sharp decline in prices, I cannot help but think back to that estate agent’s comments and wonder whether or not the agenda here is to assist agents in educating sellers to reduce prices. Ask yourself the question: were these agents predicting a 25 per cent or 30 per cent decrease in value this time last year, or, were they advising buyers when viewing properties that they need to make a decision quick because the price of the property is likely to go up?