Stall The Ball

I’m a bit puzzled by the current housing market at the moment. On the one hand we have doom and gloom merchants saying it’s all going to end in tears. On the other hand we have commentators saying it’s just a readjustment and nothing to worry about.

But at the coal face as a seller I can tell you that although the prices may not be collapsing, the housing market is imploding. My house is on the market for a year and although we have had viewings and even an offer it hasn’t sold.

We’re lucky. I know of at least 6 other people who have their houses on the market for a similar length of time who haven’t had one solitary viewing. Houses are selling in Dublin, Cork and other cities. But once you move outside the cities the housing market isn’t just stagnant, it’s dead.

Local estate agents are running out of window and wall space to hold all the brochures. Some are now resorting to revolving displays, electronic displays and floor standing displays to get all the houses on their books displayed.

My reaction to this was to say ok, if the housing market is like that, it’s time to reduce the price. After all, if the price I sell my house for is reduced by the same amount I can expect to buy another house, what’s the difference? In fact I’ll end up paying less stamp duty and fees from the auctioneer.

But our estate agent is adamant that reducing the price, unless it’s a mammoth drop, won’t help sell the house. He quoted examples of other houses nearby where the price was slashed by 25% not getting any more viewings. He then proceeded to give an example of a house marketed as “Must Sell” getting offers 30% to 40% below the already keen asking price.

Conversations with other people selling houses in the area revealed similar stories from other estate agents. Similar stories, similar examples and similar dire warnings.

All of this got me to thinking. Who exactly benefits from the prices remaining static or at best slowly reducing?

My logic is that if I was expecting to sell my house for, as an example, 400,000 Euro and I was planning to buy another house for 500,000 Euro then the actual cost of the house goes like this.

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