£1 Million+ Houses – Why Are They So Tough to Sell?

Transcript

Hi, I’m Ruban Selvanayagam from Property Solvers.

As property values increase, so too do the challenges involved in selling them.

Once you move beyond the £1 million mark, many of the rules that apply to the mainstream housing market no longer hold true.

The buyer pool becomes much smaller, expectations rise considerably, whilst marketing and pricing become even more critical.

In this video, I’ll explain why higher-value homes – particularly in today’s market – remain tougher to sell than many owners expect, the common mistakes sellers make and, if you own a property in this price bracket, what you can do to maximise your chances of securing the right buyer.

Let’s get into it…

To put things into context, recent research by Investec found that asking price reductions of around 10% had become typical across much of London’s £1 million-plus market.

In St John’s Wood, the average reduction reached almost 15%. Knightsbridge averaged almost 13%, while Chelsea was just over 11%.

The Financial Times also recently highlighted Montpelier Square in Knightsbridge, where seven Georgian mansions were on the market at the same time, with an average marketing period of more than 15 months.

One property reportedly sold for more than 30% below what it might have achieved a decade earlier, illustrating just how challenging parts of the prime London market have become.

But the underlying trend is by no means confined to London.

Across many parts of the UK, including Surrey, the Home Counties, the Cotswolds, Bath, Oxford, Cambridge, Cheshire’s Golden Triangle and parts of Edinburgh, many premium homes are taking considerably longer to sell than they did just a few years ago.

So why is this happening?

The first thing to understand is that every increase in price significantly reduces the number of potential buyers.

At the lower end of the market, there may be hundreds of prospective purchasers actively looking for that specific type of property.

Once you move beyond £1 million, this number narrows quite dramatically.

There are simply fewer people with both the financial means and the desire to purchase at that level.

And even those who can afford it generally have much greater choice.

That naturally leads to longer marketing periods. These days, the more affluent buyers are rarely under pressure to make quick decisions.

They’re often viewing several competing properties, comparing locations, specifications and value for money before making an offer.

Many are also involved in property chains themselves, where the sale of an existing home needs to complete before they can proceed.

Even buyers with substantial wealth don’t necessarily have millions of pounds sitting in a bank account.

It’s also worth remembering that many purchases at this level are discretionary rather than essential.

A family buying their first home or upsizing because they’ve outgrown their current property may have little choice but to move.

By contrast, many buyers of £1 million-plus homes are probably already living in excellent properties.

They’re often only prepared to move if they find something that genuinely improves their lifestyle.

That gives them the luxury of being patient in today’s “buyer’s market”, negotiating harder and simply waiting for the right opportunity to come along.

Affordability also plays a much bigger role than many people realise.

Although cash can be reasonably common at the top end of the market, many buyers still rely on mortgage finance.

Larger loans naturally result in much higher monthly repayments, making buyers increasingly sensitive to interest rates.

Then there are the transaction costs.

Stamp Duty Land Tax alone can run into tens of thousands of pounds on a £1 million-plus purchase, before you’ve even factored in conveyancing fees, surveys, mortgage costs, removals and any refurbishment or improvements the property may require.

When buyers are committing that level of capital, they’re understandably going to scrutinise every aspect of the purchase.

There’s also the investment case to consider.

In a market where price growth at the top end has been relatively subdued in many areas, some buyers inevitably question whether tying up £1 million, £2 million or even more in a single residential property is the best use of their capital.

For some, renting a similar property for a period whilst investing that money elsewhere can appear to be a perfectly rational alternative. Others are simply choosing to wait until they have greater confidence in the direction of the housing market and wider economy.

Whether that’s ultimately the right decision is another debate. But it inevitably reduces the number of active buyers competing for higher-value homes at any given time.

Pricing is perhaps the biggest challenge of all.

We’ve often seen sellers anchor themselves to what a neighbour achieved during a stronger market, or simply what they believe the property is worth.

Unfortunately, buyers don’t see it that way.

They’re comparing your home against every other similar property currently available.

What’s more, relatively small percentage differences translate into very large sums of money at this end of the market.

Price a £1 million home just five per cent too high and you’re asking buyers to find another £50,000.

At £2 million, that’s £100,000.

At £3 million, it’s £150,000.

Those aren’t insignificant amounts of money, regardless of how wealthy the buyer may be.

In our experience, premium homes that are priced realistically from the outset generally perform much better than those that spend months chasing the market down through repeated price reductions.

Another factor is that many higher-value homes are unique.

At £300,000 there may be dozens of similar properties that have sold recently, making valuations relatively straightforward.

At £2 million or £3 million, that may no longer be the case.

One property may have substantial land, be configured differently, have facilities such as a swimming pool or planning potential that simply doesn’t exist elsewhere.

With fewer direct comparables available, buyers, valuers and sellers can all arrive at different opinions on what the property is worth.

Presentation also matters more than many owners realise.

When buyers are spending seven figures, expectations naturally increase.

Professional photography, drone footage, video tours, accurate floorplans and beautifully presented interiors all become increasingly important.

At this level, buyers aren’t simply purchasing a property.

They’re often buying a lifestyle.

The first few weeks of marketing are also crucial.

Most serious buyers already know their chosen area extremely well and receive instant alerts when new properties become available.

If a property is launched at the wrong price and fails to generate early momentum, it can quickly become stale.

By the time the price is reduced, many buyers start wondering what’s wrong with it rather than recognising that it may simply have been overpriced from the outset.

It’s also worth recognising that many expensive homes don’t necessarily make compelling rental investments.

For owners considering letting the property instead, the achievable rental yield is often too low to justify holding on to the asset over the longer term.

Selling therefore becomes the more commercially sensible option for many owners.

So what about route to market?

Traditional estate agency remains the right approach for many premium homes, particularly where there is a clearly identifiable buyer audience and sufficient time to expose the property properly.

We often recommend working with an estate agent that specialises and has proven experience in the prime market. Although their fees may be higher, their experience, buyer networks and marketing expertise can often prove invaluable when selling at this level.

However, auction shouldn’t automatically be dismissed.

Certain higher-value properties, particularly those with development potential, refurbishment opportunities, substantial land, unique characteristics or a specialist buyer audience, can perform exceptionally well in a competitive auction environment.

For sellers whose priority is speed and certainty, a direct cash sale may also be worth considering.

At Property Solvers, we occasionally purchase higher-value properties directly, although the trade-off is typically achieving a lower price in exchange for convenience, speed and a guaranteed buyer.

The key takeaway is this.

Million-pound homes aren’t inherently difficult to sell.

They’re simply marketed within a very different part of the housing market.

The number of prospective buyers is lower, purchasers are more selective, transaction costs are considerably higher and realistic pricing becomes absolutely critical.

Ultimately, a premium home isn’t worth what it cost to build, what you’ve spent improving it or what your neighbour achieved several years ago.

It’s worth what today’s market is prepared to pay.

The more accurately a property is priced in line with current market conditions, presented professionally and marketed to the right buyer audience, the greater the chances of achieving a successful sale.

At Property Solvers, we’ve helped owners sell properties across a wide range of values over the last 20 years and are always happy to discuss the options available.

A big thanks for watching.

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