One major London estate agency has seen 20% of its sales pipeline fall through as a result of buyers trying to renegotiate prices, reports acquisition firm Black Brick.
The practice of gazundering reared its head in the wake of the ill-fated mini-budget, but it doesn’t sound like vendors have been buying it.
“Some buyers treated the Truss imbroglio not as a problem but as an opportunity”, according to PCL acquisition firm Black Brick, as punchy purchasers lowered their offers at the last minute to push sellers into offering a deal.
Buyers’ attempts to renegotiate at the last minute are not working in PCL, says Camilla Dell
“I spoke to a large central London agency – they have seen 20% of their pipeline fall through where buyers have tried to renegotiate prices,” said managing partner Camilla Dell.
“What has happened is that not only have the vendors said no, but they have also decided not to sell their property to that buyer so it is not a strategy which is working”.
Opportunities to buy at distressed levels “will be few and far between,” she added, suggesting a “more constructive” way to approach the delicate negotiation process is to understand both what a fair market price is for a particular property and the needs of its vendor.
Despite the somewhat gloomy market conditions, if sellers do not have a mortgage or are simply testing the market, buyers are warned that a below-market offer is “highly unlikely to be positively received”.
Inevitably there will always be those keen to chance their arm and this, said Dell, means that while central London prices should remain fairly stable over the next few years, transaction numbers “may well tail off”.
Some investors and buyers ‘have a fixation on discounts and bargains’
Those holding out for GFC-level price falls are likely to be disappointed, she added: “Some investors, and buyers in general are really hoping that prices will come down 20%, like they did in the financial crisis…they have this fixation on discounts and bargains.
“But in Prime Central London only one in three people have taken debt to buy their properties.
“Frankly, they don’t need to sell, and if prices do come down they won’t.
“I know that is going to be very, very disappointing to some people, but buyers should be focussing on whether a property is the right home for them and their family, somewhere they are going to be able to live for ten years.”
Both Savills and Knight Frank expect PCL to outperform the rest of the country in the years ahead – with the least dramatic price correction in 2023 and the highest cumulative price growth to 2027.