Winter property slump comes early
The average asking price for a home in England and Wales fell by 0.7% in November, with all regions except London seeing a downturn, a property website said today.
In a further sign of a slowdown in the market, Rightmove said there had been an early onset of the traditional winter slump in sales, increasing the average time a property spends on the market before a sale was agreed to 92 days.
This is a jump of seven days from October’s figure, and the highest November figure since Rightmove began keeping records in 2002.
The index, which monitors the prices of properties listed by 12,500 estate agents, suggests prices are at the same level they were four months ago, while the rate of year-on-year price inflation has fallen to 7.9%.
The average asking price for a house is now £239,986, down from £241,642 in October. Rightmove said it expected the slowdown to continue, with more falls in December and the first part of the new year.
These would be offset by small price gains later in the year, fuelled by a more stable environment and underlying demand for homes, resulting in a flat market in 2008.
The figures are similar to those released by Nationwide last week: the building society predicted growth would fall 0% next year.
“Prices are set to flatline in 2008,” said Miles Shipside, commercial director of Rightmove.
“While we do not expect a price drop overall, there will be parts of the country that are over-priced and over-supplied for the likely levels of affordability and demand next year.
“In these areas, motivated sellers are starting to cut their prices and will need to be the cheapest on the street to sell.
“While bargain hunters will be paying less for these properties, prices will rise where demand continues to outstrip supply in quality areas close to major conurbations, especially London.”
High stock levels
Rightmove’s survey suggests that it is not just buyers who are holding back to see what will happen to prices next year - sellers are also biding their time, resulting in a high level of available stock.
Shipside said: “If you have to sell, then seriously consider dropping your price and taking an offer now rather than holding out. You could end up being offered even less in a few months’ time.
“The good news is that with many sellers still refusing to reduce substantially, a 10% reduction can really stand out.”
Against a backdrop of falling prices around the country, a lack of supply continued to buoy growth in London, with asking prices up 2.3% over the month, Rightmove said.
Year-on-year inflation in the capital’s housing market stands at 19.6%, with the average asking price reaching £412,731.
Howard Archer, chief UK economist at Global Insight, said he agreed with Rightmove’s forecast of flatlining prices in 2008.
“While there is still some volatility in the latest data and surveys, the
overriding impression is that housing market activity and prices is now starting to slow markedly in the face of heightened affordability pressures and tightening lending practices. We expect these factors to increasingly bite over the coming months.
“Affordability continues to be pressurised by higher interest rates, elevated house prices and muted real disposable income growth,” he added.
(Source: The Guardian 19/11/2007)