A recent report about real estate in the U.K., especially properties located in or near London, contends that flat local real estate prices and a depressed market is at least in part due to the fact that sellers as well as real estate agents may have unrealistic expectations regarding the selling price of their properties. With sales volumes that can be up to 50% lower than the average, the average price of homes for sale is definitely trending downward. Sellers with inflated beliefs as to property value reject offers, which forces the values further down. There’s often a 30% difference between the value expected by the seller and the price the buyer is willing to pay. A seller who’s asking £100,000 for a UK real estate property and receives offers in the range of £70,000 is better likely to reject them.

The Sellers are to Blame

Owners aren’t listening when real estate brokers tell them their property value has fallen. The decline has reached as much as 20% each year. One expert in real estate services places the blame firmly on the sellers: “As a result they [sellers] are unwilling to accept agent advice on appropriate asking prices or offers. Consequently, many properties are withdrawn from the market or remain unsold for long periods, producing an unprecedented low number of transactions. Unless their [sellers] properties are absolutely outstanding it is essential that they [sellers] adopt a realistic attitude and listen to advice if they want to achieve a sale.”

Even the Most Expensive Properties Are Not Immune

Another alarming facet of this trend of UK real estate is that even high-end properties designated as “super prime” are not immune. Anything worth more than 10 million pounds is super prime. Every real estate agent knows that even foreign investment isn’t helping. Many super prime property owners have elected to rent rather than sell their properties, creating a surplus, which in turn depresses rental prices.

Blame the Lenders Too

Even though the government is supporting insolvent banks the mortgage rates are rising. Bank of England recently raised rates from .2% to .5% despite interest rates dropping – meaning there’s no benefit to consumers. The banks justify raising their rates in the face of lowering national rates by saying that all the banks are doing it. But most banks don’t respond with lower rates when one bank drops rates. Whether or not this is true, it’s still bad news for real estate in the U.K. And it’s even hurting news for consumers who are seriously looking to purchase UK real estate.

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