Posted on August 16th, 2011 | Categories - House Prices
In a sign of growing realism the property website Right Move, has said that sellers have dropped their asking prices for a second month in a row.
Experts believe that one of the reasons the housing market has been sluggish in 2011 is the gap between asking prices, which have been rising, and sales prices, which at best have been level.
However, in a move that may show sellers are becoming more realistic, Right Move say that asking prices fell in August by 2.1%, this comes after a fall of 1.6% in July.
This does of realism is echoed by figures from Zoopla, a competitor to Right Move. Zoopla’s figures show that 39% of all homes up for sale had seen at least one price reduction since being put on the market; the average reduction was £18,000, which equated to 7% of the original asking price.
Last year the average reduction was 6% and 32% of asking prices had been reduced at least once, giving further evidence to the argument that sellers are becoming, perhaps through necessity, more realistic.
Miles Shipside, commercial director of Right Move, said: “We’re in a ‘limbo-land’, where a restricted number of motivated sellers are trying to match themselves up with the similarly restricted number of financially capable buyers,” said Miles Shipside of Rightmove.
“In many parts of the country, transaction levels are limited to the number of sellers who are willing to price aggressively below the competition and can afford to do deals,” he added.
Nicholas Leeming of Zoopla said: “Vendors continue to have to lower prices due to weak buyer demand.”
Despite this latest reduction in asking prices there is still a massive gap between the average asking price and the average house value in the UK.
According to the government’s own figures produced by the Department for Communities and Local Government (DCLG) the average selling price is £203,528, some 14% lower than the £231,543 average asking price according to Right Move.
If the results of other house prices survey’s are used the gap is even wider. The Nationwide Building Society puts the average cost of a home at £168,731 with the Halifax coming in slightly lower at £163,981.
Many experts believe that tight mortgage lending criteria by banks and building societies is still one of the reasons why the housing market is sluggish.
Whilst the best deals are reserved for buyers with the largest deposits, which has always been the case, those with smaller amounts to put down are often excluded from any deals. Before the credit crunch many lenders were prepared to advance 95% and in some cases 100% of the buying price, this is now not the case making it harder for many, particularly first time buyers to enter the housing market.
Nicholas Leeming again: “Sluggish economic growth has hit buyer confidence and tight-fisted lenders are currently making it impossible for swathes of would-be buyers to benefit from the price reductions.”