Consider a quick house sale as prices will drop quickly to their new level.

Now that we can see reports from Halifax indicating a drop in average house prices by 2.5% between February and March we feel that the tipping point has been reached where prices will drop quickly over the coming months, to a new level.  Interest rates drops and the underlying demand for properties should hopefully mean that this drop is not more than 10%.

The reason that the drop is likely to be quick is that house prices exhibit something called 'stickiness'.  Home prices are notoriously sticky in a slump.  'Stickiness' means that house prices don't fall quickly even if demand drops. The reasons are fairly obvious: Sellers get fixated on what they think a house is worth and refuse to sell for a penny less. So the only buyers are the few people who think houses are worth buying even at the propped-up prices. The trouble is, when prices are sticky, sales volumes fall off even more than they otherwise would.   Suddenly those sellers holding onto their original prices are forced to drop, either through the fact they are repossessed, or they are forced into moving and need a quick sale.  This tends to happen en-mass and very quickly with a herd mentality, resulting in a sudden drop in prices.

For people who need to sell in the next 6-12 months we would recommend securing a sale quickly as it looks like we have reached the inflection point where prices are going to drop quickly to their new norm.  In some regards, it may be too late as the slide seems to have started and hence the only alternative may be to secure a deal with a property trader who will Complete the transaction in 3 weeks.

Undertaking a fast house sale to a property trader at this time will obviously mean you take a discount against the open market value of say 20-25%, but, if you assume the market is dropping 10%, this only represents a further discount of 10%.  For this discount, you can get on and move, you can potentially avoid double mortgage payments if the house is empty and if you are moving to rental property for a while, you can eliminate the risk of a further slide in property prices, which at worst case could be 20-30% decrease.

If you do consider a quick sale to a property trader make sure you chose one that is ethical and will not try and negotiate further price reductions as you get near to Completion and will not pull out of your deal.