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The real reason the property market is struggling

publication date: Jul 8, 2009
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Jamie is an estate agent in Basildon. He ended up in the industry because he couldn’t get a job in the City as a money broker. Jamie had a few decent years but now his shiny suit is a little faded and his Vectra SRI is a couple of years older than he would like. ‘There just ain’t no buyers about’, apparently.

He sold a repo though yesterday which was ‘well cheap’ and had loads of punters after it. Jamie found this bewildering given that there ‘ain’t no buyers about’.

After the gloom of the morning sales meeting, he re-fixes his sunglasses to his well-gelled spiky haired head and trundles off to his first appointment, a three bed mid terraced in Great Knightleys. The owners paid a fortune for it at the peak of 2007 with the help of a 125% mortgage from Northern Rock and whilst they read The Sun and know that property prices have dropped a bit, they also think that because they have paved the front garden and done something ‘nice off of Changing Rooms’ with the kitchen, their house will be the best one around and should sell really quickly.

Jamie undoes his tie a little, pops a fresh stick of gum into his mouth and embarks on his standard pitch as to how lovely the place is, how much they have spent on it and how, using his firm, you’ll get a buyer ‘no problem’.

Jamie hasn’t bothered to gather any market intelligence as to what nearby houses have actually sold for. His mate had a similar house on the market for a few months at the back end of last year for £180,000 and so that’s probably about right. In any case, he doesn’t want to irritate the owners because he won’t get the instruction to write up on the board. This month’s incentive is a £100 Thomas Cook voucher for the best lister in the region and that will go nicely towards his week in Ayia Napa with the lads.

Jamie has slashed his fee to one per cent. He always strives to do business by encouraging his client not to ring round the other 25 local agents. Cheapest fee and the highest valuation normally do the trick, and it has this time. Perfect, even if it means his firm is struggling and only able to advertise once a month.

And so, priced at £184,995, ‘Situated in this ever popular area...’ and a couple of snaps, the marketing of Jamie’s new conquest is added to Rightmove to accompany the other dozen identical homes that have languished there for months. Still, it’s still a new instruction ‘innit’ says Jamie, as he screeches off to his one o’clock.

Basildon could be any other town. ‘Jamie’ could be any one of thousands of estate agents that go about their business in the same way. Jamie and his ilk are a significant part of the problem with the UK housing market and will remain so until they have the guts to tell the truth about how things are. If prices are slashed buyers will buy.

Whilst delusional home sellers lap up Jamie’s inaccurate ramblings because they don’t want to accept ‘a loss’ on their home, the two will continue to work hand in hand to maintain the gap that now exists between what a well informed buyer is willing to pay and the sellers’ reluctance to open their eyes to the reality of what they must now accept.