It looks like unoccupied property insurance demand will just keep going up and up, a bit like asking prices for new property coming onto the market.
Rightmove have reported that for May 2011 asking prices increased increased 1.3% compared to March 2011 and are now 0.7% higher than in May 2010. This is against a backdrop of limited mortgage supply, high levels of unemployment, low confidence, worries about job security, high inflation and record low interest rates from the BoE!
Some might be perplexed by asking price expectations. In fact this does seem rather odd as the level of unsold stock on agents books once again increased to a new record for May, up to 76, from a high of 74 in April. If you look around, a lot of this stock is unoccupied, yet there seems no rush to sell.
There are logical explanations to the high prices. Firstly, stock levels are very low, despite high levels of unsold stock which means sellers feel they can be more bullish on prices. Secondly, as levels of stock coming on the market are low, estate agents are once again competing for property and one major factor they compete on seems to be the price they value at. Thirdly, mortgages are at a all time low so distressed sales seem few are far between so sellers can sit on the market and not have to lower the price.
Is there a underlying market?
Yes. but what do I mean? An asking price is just that, it is not the selling price. Property owners that have to sell price accordingly. The fact is a good property, in a good area priced well seems to sell very quickly. They are few and far between and buyers are keen if the price is sensible. In 2005 it seemed that you could sell a house that needed a new boiler, new windows and painting for virtually the same price as one that had all of this done. Buyers are now being more savvy, and seem to take into account the additional work (and associated costs) that needs to be undertaken on a property - and buyers are demanding this gets taken into account with the asking price. For those who need to sell do at a price that is attractive to the market, and if the number of people that need to sell increases, it seems we may see a decrease in the initial asking price.
If you need unoccupied property insurance contact click4quote for a quotation.