Why don't people reduce if the house isn't selling?

[donttellmehesalive]

Around here, it's a buyers market now. Everything has been on for months, lots coming back on, most reduced. I've only seen one sold in the past month in my price range.

But I'm fascinated by those properties that went on in the second quarter, were wildly overpriced, and are still there or reduced by a tiny amount. Some houses have come on in the past week for more than they were on for in March or April.

I always assumed they were people who were chancing their arm and didn't really care if they sold or not, or would only move if they sold for a lavish amount.

But I was recently talking to a neighbour who has been on for a year. She went on when everything was selling, but for about £100k more than the house was worth. Over the year, she's reduced by about £10k per month. It's now £120k less than it was on for last October, but there still isn't any interest and she says she's desperate to downsize and move near family. Why not price to sell in the first place? Do people take bad advice from optimistic agents, or what?

@Sarah1217 I totally agree and as I posted earlier a lot of people may spend £50k on improvements of their choice and fully expect to get that back plus some profit. This may work if you have had a house many years but not necessarily if you bought after 2018. A lot of people too have spent way over what is a top end price for their area because they didn't envisage moving and now realise their are only so many people prepared to pay top whack in an average kind of area because they cannot raise mortgages high enough - so will indeed go for one for less money that they can gradually improve but at least get a mortgage on

'I definitely think there are a lot of people who haven't quite got their head around the idea that house prices can go down as well as up'
This ^

I think lots of people have been lulled into a false sense of security because we have had a long period of rapidly rising asset prices caused, primarily, by loose regulation of lending and monetary manipulation (QE and ZIRP).
Lots of people are assuming that the market will 'normalise' or 'things will go back to normal' in a short period of time. Normal to them meaning rapidly rising asset prices. They assume that, if they leave their house on the market for a year or two, the market will rise up to their favoured price point. That's very unlikely; indeed all the economic indicators are pointing to asset prices going down. There is just a natural assumption that what has happened within their memory will continue to happen and that things will work out for the best (for them, obviously)! People also have dreams of their next property based on a certain asking price or have plans to downsize and give their children a deposit or they may have a BTL which is their pension. They don't tend to consider the downsize too much.
It's much more likely that the pragmatic/ realistic sellers who achieve sales will do much better financially than those like @donttellmehesalive's neighbour who very slowly chase the market down.

@oiltrader we're in a very sought after area of Scotland where until recently, houses were selling for 60-100k over. We originally marketed for o/o 170k back in July and would have been happy with a few grand over value but had to quickly revise our hopes on that. Many houses round about here are now fixed price which was previously an unknown for this area.

'I definitely think there are a lot of people who haven't quite got their head around the idea that house prices can go down as well as up'
This ^

I also know people who couldn’t understand that even though the value of their house was going up. So was the value of the next house they bought. Forcing them into a bigger mortgage. And that rising house prices weren’t a positive thing, unless you drop out of ownership or move to an area not on the up.

We're looking at the moment and it's ridiculous how long places have sat on the market without being reduced. Sellers think it's still Spring of last year and it's not, they need to adjust their expectations.

We saw somewhere the other day that has been on since early November, originally it was on at 550k. 30s house, very dated. Owners bought in 2012 but clearly hadn't done any decorating since the previous owners as decor still there from the 90s. Ridiculously overpriced. They've dropped it to 500 now but even that is pushing it. EA says they're getting divorced so want enough money to each buy somewhere. Good luck to them. We decided not to offer as it needs so much work doing to it. I would be surprised if it even goes for 400k in the end. Sellers are completely deluded.

There's also the fact that if house prices were lower we'd all have a lot more money to spend on other things. Think of all the money currently going to housing costs that could otherwise be circulating through the economy, supporting jobs and small businesses and being taxed to pay for vital services.

Deliberate asset price inflation by the political/ financial class has been a disaster imo.
The UK economy is 'supported' in large part by the housing market which gives owners confidence to spend as prices rise and enables them to use them against borrowing. Not a good scheme as it will inevitably end in disaster and takes lots of people with it.

@Taylortaylortaylortaylor at least they dropped 50k.
I’m seeing places on for about 450k dropping by 5k after 2 or 3 months.
There’s still plenty on at last autumn’s asking prices.

Still waiting for a drop in prices in my area. We want to move closer to our children’s schools and our only way of achieving this now that interest rates have have increased is for there to be a bit of a dip. I don’t think it’s going to happen. Yesterday a house came on that previously sold for £1.1 million in September 2020. They’ve put it on at £1.425 million. A couple of new bathrooms and some new carpets in that time. Kitchen has just been repainted. No extension or extensive reburbishment.

It matters less whether houses are coming on the market at increased prices and more if they're actually selling at those increased prices.

@Taylortaylortaylortaylor very few are selling. A beautiful Edwardian one has recently sold but they reduced from £1.3 to £1.1 million. Unfortunately needed too much work for us as kitchen was tiny and we couldn’t afford the cost of the extension. Would have been perfect as walking distance to my DC’s school. Similar sized houses are coming on at £1.25 million but they are not period properties and still need a lot of work. They are also further out so a bus ride rather than walking distance. Giving up hope. Looks like we will be doing this bloody school run for the next ten years!

You can see in threads on here there are people with no idea that the market has changed in the last 6-10 months. It's like everything that happened in the autumn just passed them by. Or possibly people are hoping for something in the budget to help keep house prices from falling? So if they just hold out for a month or so, things will improve.

My friend had 4 sales fall through because mortgage offers were withdrawn. Finally she’s sold but it’s taken way longer than it should have had on a really popular house.

@Postapocalypticcowgirl also I think less people are going into buy to let due to new legislation. Whilst that's not such a big issue at the high end- I am pretty sure it is at the cheaper end of the market.