Reality gap stunts home sales

Reporter

Monday 11 February 2013

THE housing market is being held back by homeowners who are asking unrealistic prices for their properties, a new survey has found.

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Jody Harrison

The latest quarterly house-price report published by s1homes.com has found a growing "reality gap" between what sellers are asking for their home and what buyers are prepared to pay.

According to the survey of market trends, the average asking price at the upper end of the market is 20% lower than the eventual sale price.

Chief among those asking unrealistic prices are those selling detached properties, as flats, semi-detached and terraced houses continue to attract offers over the asking price. Mark Smith, managing director of s1homes, said: "The picture of the market as a whole is still being affected by detached properties being priced at unrealistic levels, leading to a significant reality gap. Selling prices are falling in the majority of areas and asking prices are not being reduced enough to close the gap. "I think what this shows is that the market has been much quicker to adjust at the lower end, while the market at the higher end is particularly entrenched, with almost no change at all in the very substantial reality gap over the past 12 months," said Mr Smith. Overall, house prices were down in the three months to December 2012, with the average price dropping from £159,310 between July to September to £154,810, almost 3% lower. The average property in Scotland is now selling for about 6% less than the asking price, compared to 5% less in the previous quarter. Iain Williamson of Ivy Property said: "We as an estate agency have to encourage sellers to set realistic asking prices. "In doing this, we are not finding such an increase in the reality gap and in fact we are achieving selling prices close to home report values. "If the selling price is not close to the asking price, it would indicate that the asking price was not correct." With sales volumes down across Scotland, the majority of regions saw little or no change in the reality gap. However, Argyll and Bute and Falkirk both saw a stabilisation between asking and selling prices, while East Lothian and South Lanarkshire saw increases in the gap. Edinburgh once again bucked the trend, along with East Lothian, where the average property sold for more than the asking price. The s1homes report, published quarterly, samples about 25,000 properties advertised on s1homes.com and tracks trends in the various property markets throughout Scotland.

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Reality gap stunts home sales

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