The stand-off between those wanting to buy at reduced prices and those sellers holding out for higher prices will disappear in many areas of the capital once ‘forced sales’ take hold, says Cluttons (www.cluttons.com), one of London’s leading estate agents.
The early driving force behind these ‘forced sales’ are financial constraints due to fixed-rate deals ending and City pay rises not coming to fruition.
Those who have overstretched to secure a mortgage are feeling the pressure, believes Cluttons, with fears of unemployment adding to market jitters.
Sales of second homes at reduced values are likely to appear too as owners sell before the market drops further.
Recommended videos for you
Richard Cotton, senior partner at Cluttons, does not regard ‘forced sales’ as a negative, but rather a positive factor for the current property market.
‘Forced sales will inject some energy into the market and break the deadlock between vendors with high price aspirations and buyers with lower price expectations. A more sensible price achieved through a forced sale can set a benchmark for home values on a whole London street, allowing anxious sellers, who need to strike a deal, and desperate buyers trapped by high prices to go ahead with a purchase,’ he says.
Cotton adds that good homes in the £1 million plus market in areas like Chelsea still are selling well, but anything of lower quality is fetching around 10% under asking prices.
‘The question is whether the drop is from market value or from a previous unrealistic asking price?’ Mr Cotton asks.