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Asking prices dropped - 21 July 2008

According to the latest market survey from property portal Rightmove, house sellers are being forced to cut their asking prices in an attempt to generate enough interest to sell. On average, the report states, sellers have cut £4,300 from their asking prices in the past month, as the inactive housing market brings even more competition for sellers chasing a reluctant and dwindling pool of buyers.

The report, which claims to cover up to 90 per cent of the market with information culled directly from estate agents, shows that the number of properties on the market at each agent is also on the up, along with the amount of time each property stays for sale. At the same time, new instructions are also at a historical low as sellers opt to hold on and ride out the credit crunch and economic downturn without risking moving into a market that appears to be grinding to a halt.

Miles Shipside, commercial director at Rightmove, said: "Sellers are finally recognising that they need to undercut their rivals from the outset, rather than testing the market and dropping prices later. Sellers' pricing needs to be at the level where deals are being done. It could be a lot better outcome to price aggressively and sell now, rather than accept a bigger reduction later as prices continue to fall."

The biggest falls in prices were seen in the West Midlands, where the average value of a property fell by 3.7 per cent. Close behind was the South East, where prices fell by 3.3 per cent to an average of £298,700. London seemed to be able to buck the trend in some areas, as prices in Tower Hamlets rose by 4.1 per cent in the past months, and property in Westminster, Brent and Kensington and Chelsea continuing to perform well.

In London, the worst-performing area was Kingston-upon-Thames, where properties saw a two per cent drop to £514,400.

Pundits continue to blame the banks, and in particular the difficulty in getting a mortgage, for the lack of any real activity in the property market. Mr. Shipside added that there would need to be a significant U-turn by lenders in order to stimulate the market, and that the banks were in danger of being blamed for a second crash in 20 years.

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