House price uncertainty creates market deadlock
- Owners staying put rather than accepting 'buyer's market' values -
25 Nov 2008
New research released today shows that 91 per cent of UK homeowners believe they would get far less than they think their house is worth if they were forced to sell in today's market - resulting in a pricing standoff between would-be buyers and sellers that adds to mortgage market woes.
The study of over 1,000 UK homeowners conducted by Zoopla.co.uk, the UK's leading house prices website which provides free, current value estimates for every UK home, reveals that 58 per cent of homeowners believe they would get almost 10 per cent less than they think their home was actually worth and a further 33 percent believe they would have to accept more than a 10 per cent discount to their value expectations if they had to sell in the current climate.
"The results clearly show an imbalance in current value perceptions between potential buyers and homeowners, with owners not yet willing to meet levels that buyers are prepared to pay today" says Alex Chesterman, CEO of Zoopla.co.uk.
As a result of this standoff, the study reveals that the vast majority of homeowners appear to have put off any plans to move in favour of refinancing and making home improvements in the coming year. According to the Zoopla.co.uk research, 70 per cent of homeowners said they were planning some form of home improvement in the next 12 months and a further 15 per cent are planning to re-finance in a bid to ease their financial pressures.
"With monthly house sale transaction volumes at almost half the levels of last year*, the credit crunch is only partly to blame. In the current market, transaction volumes are likely to remain frozen until sellers either reduce their price expectations or buyers gain significant confidence. In the meantime, it leaves homeowners with few options other than adjusting their expectations or staying put and making the most of it. For those faced with making decisions in this market - either buying, selling or simply curious - Zoopla.co.uk is the ultimate tool, providing free instant value estimates on any UK home, along with local market information and value trends".
- Ends -
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Notes to Editor
- Research carried out by Fly Research amongst over 1,000 UK homeowners for Zoopla.co.uk in October 2008
* Residential property transaction volumes for England and Wales
Jan-Aug 2007 Jan-Aug 2008 # of sale transactions 895,167 462,939
Source: Land Registry
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What is Zoopla
Zoopla is a revolutionary online publishing service and community website providing information and tools to give users an advantage in the UK residential property market. Our aim is to create a transparent marketplace and we believe that information should be free and easily accessible to everyone.
How did it start? In early 2007, following the success of bringing DVD rental to the internet with LOVEFiLM.com, Zoopla founders Alex Chesterman and Simon Kain realised that the internet had yet to deliver meaningful change to the UK property market. It became clear that consumers lacked essential tools and information to help them understand home values, view similar properties, learn about past transactions...
...and then we thought:
- Why not offer users a tool to get access to FREE, instant value estimates on their homes or anyone else's?
- Why not let buyers make offers on ANY home, instead of just the 4 per cent of homes currently on the market 'for sale'?
- Why not let owners find out if there is any market interest in their homes without having to list them 'for sale'?
- Why not let agents and sellers market their 'for sale' listings FREE by providing them with easy-to-use tools?
- Why not let anyone ask/answer questions and share their knowledge about any homes or neighbourhoods?
- Why not put current value estimates, sold prices, homes for sale and local information all together in one place?
So, we have started by providing FREE value estimates and sold prices on homes, allowing sellers and agents to list homes for sale FREE, and letting all users edit information and upload photos. We have also launched some unique features, like TemptMe™ and AskMe™ which allow users to gain an insight into the market and discover information they won't find anywhere else.
By making TemptMe™ offers, buyers can try to entice owners to consider selling. Owners also benefit from this unique feature by being able to see what level of interest there is in their home without actually having to list it for sale. The AskMe™ community feature allows anyone to find out more about any home or neighbourhood that they are interested in by posting questions for those in the know to answer.
Zoopla value estimates are calculated using a proprietary algorithm (secret formula) that we have developed by analysing millions of data points relating to property sales and home characteristics throughout the UK. The algorithm works by comparing relationships between home prices, economic trends and property characteristics in given geographic areas. Our estimates are constantly refined by our team of analysts, using the most recent data available and a variety of statistical methodologies, in order to provide the most current information on any home.
Zoopla Limited is a privately held company, backed by leading international venture capital firm Atlas Venture.