Property sellers be aware

More evidence supporting the close correlation between the housing market in the UK and the south of Tenerife came out this week with similar reports from here and the UK.

The primary source for information on the Tenerife market is Tenerife Property Shop, who are probably responsible for the largest number of transactions in the south of the island. 

Although the company reports a rise in demand, it also reports a very substantial rise in the number of properties on the market.  This is in danger of creating an over supply in the market, say Tenerife Property Shop. 

Over optimistic sellers, on the other hand, have been pushing prices up, which is resulting in a polarisation within the market.  Mary Spencer, a Director of Tenerife Property Shop told us, 'The number of new instructions received currently stands at more than double the number of properties coming off our books;  over optimistic sellers  will see their properties languish for many months unsold, while realistic sellers are agreeing sales at prices below last year's boom prices'.

The combination of a backlog of properties on the market from last year and a large volume of new instructions since January means stock levels remain at historically high levels. Prospective purchasers are faced with a wide choice of properties in many areas, and can afford to be choosy in terms of what they want.

The onset of the traditional Easter home hunting season sees buyer interest continue to grow. There has been a moderate pick-up in activity on the part of buyers, both in terms of their research of properties on the Internet, enquiries, viewings of properties, and a resultant seasonal increase in transactions agreed. 

Despite this, Tenerife Property Shop predict that the market will take at least the rest of the year to reach an equilibrium between demand and supply.

The situation is echoed in the UK. Estate agents appear to be getting more and more confident about the housing market, as a survey found asking prices heading back towards last summer's peaks.

Rightmove, a property website, said asking prices in March rose by another 0.6%, from the previous month, taking the average property asking price up to ₤194,962, only ₤1,236 off the record set in July 2004.

Rightmove appeared to be surprised by the March move up in prices as 110,000 new sellers added to the growing over-supply in the market.  'Since the New Year, over-optimistic sellers and estate agents competing for market share of new instructions have pushed asking prices up again,' said Miles Shipside, Rightmove's commercial director.

The survey found that the number of properties coming on the market is almost twice that coming off, the biggest imbalance in three years.

Rightmove said 'over optimistic' sellers face months on the market, while agents report realistic sellers are agreeing deals at 10 pct below last year's boom prices.

The survey was conducted after measuring 110,701 asking prices of actual properties put on sale by estate agents between Feb 13 to March 12, or over half the market.

Commenting on this correlation, Mary Spencer told us, 'It is not that surprising that the markets are in such close sync, because the number of homes owned by the British in the south of Tenerife is so high.  Hopefully sellers will react to these market trends and not price themselves out of the market, and agents will not be irresponsible by promising high prices just to get more properties on their books.'