Overvaluation of properties, lack of supply and Brexit have been given as the main reasons from estate agents as to why prices are having to be cut in pockets of Britain.
Recently, we revealed the top 10 areas where house prices are being reduced in order to sell, with many experts stating it is now a buyers market.
Around 38 per cent of properties for sale were reduced in price in October after being listed – an increase of 5.45 per cent from April, Zoopla data shows.
Decrease: London was sixth on the list with an average property price reduction of 6.89%
One expert said that in 34 years in the business of buying and selling property, he hadn’t seen a better time to bag a bargain.
This is Money has spoken to estate agents from the six areas which have seen the biggest decreases in asking prices and asked why they think their regions have been hit in particular.
These are Bradford, Bolton, Doncaster, Mitcham, Newcastle – and London.
A number of reasons were highlighted for the decrease in prices, with many estate agents suggesting local economic factors have created a difficult selling environment in their areas.
Aside from Brexit, an over saturation in the market plus stamp duty increases have also been flagged as significant reasons.
Map detailing the top 10 areas in the country that have had the largest asking price reductions
Bradford topped the list of areas in the UK with the biggest fall in asking price for property
1. BRADFORD – 7.77% DISCOUNT
Number one on the list for properties with the biggest decrease in original asking price for property was Bradford, according to Zoopla.
It is home to the largest average discount of 7.77 per cent.
Zahoor Yasin, director of Manzil Property Management, believes that valuations of properties is one of the main things that puts people off selling as they believe they should get more money than what their properties are actually worth.
He said: ‘Sellers aren’t always happy with valuations but it’s a catch-22 as by comparing prices and not selling their property, they are not helping the market.
‘They want a valuation of £150,000 but I know that it won’t sell for more than £100,000.’
Yasin says he is surprised, however, that things are as bad as they are in Bradford as the city has gone through a number of recent changes in an attempt to reinvigorate the area.
He admits: ‘Nothing is really selling. Things seemed to be looking up over last few years as Bradford got a new shopping centre in the city centre but really it is not picking up.
‘Crime is the same as other places in the UK so I don’t really know why Bradford is any different.’
Mitcham, in London, was found to have the second largest average discount in property prices
2. MITCHAM – 7.45% REDUCTION
For estate agents in Mitcham, however, Brexit is the more pressing issue.
The London district – which is in zone three and four – was found to have the second largest discount in reduced properties on the market with a 7.45 per cent average decrease.
Ali Qazi, branch manager of Barnard Marcus, in Mitcham said: ‘We have, without a doubt, noticed the difference in property prices.
‘With Brexit looming, and the fact we haven’t actually been able to make a deal yet, the market is definitely shaken.’
With Brexit looming, and the fact we haven’t actually been able to make a deal yet, the market is definitely shaken.
Qazi believes that Brexit has negatively impacting Mitcham’s residents. He said: ‘Mitcham is surrounded by affluent areas.
‘From our point of view, the kind of people that actually live in Mitcham are blue-collared workers and because of Brexit, they are being affected the most.
However, he said that the fears surrounding the deal was ‘scaremongering’.
He added: ‘Once Brexit actually happens and people see nothing much has happened then it will be okay.
‘I just hope that Theresa May actually goes through with it. Uncertainty is the worst thing and that’s what everyone is right now, uncertain.’
An estate agent in Newcastle thinks unemployment in the area could be a factor for low prices
3. NEWCASTLE – 7.18% REDUCTION
Newcastle is the city with the third biggest drop in asking prices with a 7.18 per cent average price reduction.
Andrew Lawson, director of Andrew Lawson estate agents, in Newcastle, said: ‘There was, rightly so, huge encouragement from the Government to build developments which means eventually there will be a flattening out effect on prices which is happening now.
‘Since 2009, I have noticed house prices going down. In reality, we are no longer going to see property prices increase by huge amounts.
‘It should be in line with wages and inflation price and they should all go up together.’
In regards to why Newcastle, in particular, has been affected, Lawson added: ‘There are some local underlying economic conditions, for example, unemployment in the area, which is above average and is potentially a factor.’
A Doncaster estate agent believes that the cost of running agencies isn’t helping the market
4. DONCASTER – 7% REDUCTION
An estate agent in Doncaster, which came fourth with a 7 per cent average price drop, believes that the South Yorkshire town’s main problem is the overvaluation of properties.
Teresa Galley, director of Galley Properties, based in Doncaster, said: ‘I think the real issue is how many agents now overvalue a property, in particular large chains and online organisations, to win an instruction to then just keep recommending to the vendor that they reduce the price when few viewings are achieved.’
The incentive to gain the listing for properties and not the actual sale is a problem that many estate agents nationwide believe is slowing down the property market as it gives sellers false hope.
The real issue is how many agents now overvalue a property, in particular large chains and online organisations, to win an instruction.
However, more specifically to Doncaster, Galley believes that House of Multiple Occupancy (HMO) properties are adding to the problem.
She said: ‘Doncaster has drawn hundreds of HMO investors.
‘When reality hits and they’ve realised that it isn’t so easy to keep them full and get the earnings that they’d anticipated, let alone the competition from the sheer over saturation of the market, they are all trying to now offload them.’
Another issue Galley believes is affecting prices is the cost of running estate agencies themselves.
She added: ‘A number of agents are struggling and already we’ve seen a few agents being sold and also leaving town centre premises for cheaper premises. So they are all under pressure to slash costs.
‘This usually means less money to spend on marketing their properties.’
Bolton had the fifth biggest reduction even though there has been investment in the area
5. BOLTON – 6.97% REDUCTION
Andrew Cardwell, managing director, for Cardwell Estate Agents in Bolton, which came fifth, said: ‘The impact of change in stamp duty rules has been unhelpful as many people were buy-to-let investors.’
With regards to Bolton, in particular, Cardwell had a positive outlook and believed the current low prices will not be for long.
He said: ‘There are currently huge investments being made in Logistics North which is a huge distribution off the M61 that is creating lots of jobs.
‘Amazon has recently opened there and it is looking at employing 1,200 people with other companies currently in the pipeline for being positioned there.’
Logistics North is also home to Aldi, Lidl, Costa and Greene King, with other available spaces soon thought to be snapped up.
Cardwell added: ‘There is also an awful lot of investment in the town centre and surrounding areas.
‘Although, it is perhaps suffering right now, in the long term, there are plenty of jobs which will provide a huge boost to the town.’
London came in sixth, with estate agents saying there is currently a property marketing crisis
6. LONDON – 6.89% REDUCTION
London was sixth on the list with an average property price reduction of 6.89 per cent.
Charles Peerless, Director of Winkworth West End, Clerkenwell & City and Paddington & Bayswater said: ‘There is currently a marketing crisis. We have 900 properties in my area and in the last nine days, 33 properties have been reduced. Percentage wise, that is far too high.’
He admitted that the lowering of property prices because of the over valuation by certain estate agents was something that happens regularly.
‘Some agents will tell you whatever you want to hear to get instruction, because at the moment, there is a record lack of properties on the market.
‘It usually takes six months to get to what it should have been in the first place.
‘It isn’t a bad market – the properties are selling if they are marketed right.’
Overall, he believes that supply is the biggest issue affecting the market but that the cost of moving also puts people off.
He said: ‘In a nutshell, in London, there is a shortage of supply.
‘Prices have been down in the past and when prices go up in a straight line, people don’t want to sell as their properties are going up in value.’
However, Peerless is optimistic about the future of the property market.
‘Brexit, interest rates and the political dynamic are all factors. So long as the demand can afford the supply then I don’t see anything but a solid foundation for property.’