This is the million-dollar question for the property market. Too few people are putting up For Sale signs: can sell, won't sell seems to be the order of the day.
This situation started about 12 months ago. In October last year the Royal Institution of Chartered Surveyors reported: 'Across the country the market is characterised by a shortage of properties being put up for sale.' Evidence of this came from such diverse locations as Alderley Edge, Doncaster and Surrey.
At the same time, the TSB produced its new affordability index under the headline 'Best housing news in a decade'. Affordability was at a 10-year high, the TSB said. In some parts of the South-east, it was at its highest for 25 years.
So why have sellers not come forward? Many are worried about losing their jobs and are thus fearful of taking on new commitments. The worst of the recession may be over, but people are increasingly aware that most jobs are becoming short- term contracts.
Negative equity is still a strong factor, particularly in the South. Brenda Hobday, manager of Winkworth in Hackney, east London, said she receives calls every day from people wanting to know if prices have risen sufficiently to release them from their debt.
In the Linnettes' case, they were thinking of moving to a larger house with the potential to be used as a bed and breakfast business. They bought their own home, Cakebreade Cottage in the village of Orwell, near Royston, in a run- down state and did it up. Mr Linnette wants to do the same thing again.
'We had our house valued and were told there was a shortage of attractive cottage properties in the area,' he said. 'When we started to look for somewhere to buy we rapidly realised that this was true. Anything with any character seemed to be snapped up almost within days. Looking around the market, the nicest house we could afford was our own.'
The Linnettes were under no pressure to move and have decided, for the moment, to stay put.
The market is effectively locked in a vicious circle. The supply-demand imbalance was expected to push house prices up quite sharply this year. Some commentators feel a prediction by Savills that prices would rise by 19 per cent in 1994 has had a disproportionate impact on people's expectations and has persuaded a number of buyers to wait for a big price hike.
Ian Dickson, manager of Winkworth in Shepherd's Bush, west London, said: 'Most local people are postponing placing their property on the market because they believe that if they wait until next year their property will be worth more. I am attending many valuations every day and in almost every case the same question is asked: 'Will we make more money if we postpone the sale until next year?'.'
The Linnettes have seen the value of their Grade II listed 17th- century cottage dip sharply during the recession. They think their agent, Carter Jonas in Cambridge, has realistically valued it at around pounds 160,000.
But when they look at what else is for sale, it appears other owners are less realistic about the value of their homes. Knowing that they would not easily be beaten down over their own price, they assume that other owners feel the same, so they will not consider anything that looks remotely overpriced.
James Laing of Strutt & Parker is one of a growing band of agents who think owners will have to wait much more than a year to see an appreciable rise in prices. He feels we are in for a period of low inflation in the property market, as elsewhere in the economy.
'We are not going to see people trading up in order to make money,' Mr Laing said. 'The only people who are going to move are those who need to move.'
This poses a serious dilemma for estate agents. Do they over- value property in order to win desperately needed instructions, only to see it not sell? Or do they stick to their guns and see the numbers of houses on their books dwindle?
During the first quarter of this year, when the market was looking relatively buoyant, the number of houses sold was still well down on the successful years of the Eighties. Only 329,000 transactions were recorded, compared with 533,000 in the first quarter of 1988.
With volumes of business so depressed, many agents have been forced to drop their fees to unsustainably low levels. In Gosforth, a suburb of Newcastle, there are eight estate agents pitching for the same business. It is a triumph if they can get commission levels above 1 per cent.
At the top of the market, what was once the big seven or eight is rapidly becoming the big three or four, with Knight Frank & Rutley, Savills, Strutt & Parker and perhaps John D Wood leaving the rest fighting over fewer scraps. If this continues, it seems almost inevitable that the next flurry of For Sale signs will be attached to the agents' businesses themselves.
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