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UK House Prices Situation: Bullish asking prices mask
falling sale prices
UK
House Prices Forecast: Negative annual growth in 2008
Rightmove
- Sellers Need To Accept "New Reality"
New
properties being placed on the market are being priced
remarkably close to the peak boom prices achieved in summer
2007, according to new figures from Rightmove.
This
has led to a 0.8% increase in asking prices in March -
an increase that is in inverse proportion to the downwards
trend for sale prices.
Rightmove's
Commercial Director, Miles Shipside, said that "Most
sellers coming to the market seem to be ignoring the increased
competition from other unsold properties and the challenge
buyers now face in obtaining a mortgage."
Shipside
went on to say that prices often overshoot in a boom before
adjusting to new market conditions, and he believed that
was what was happening now. "Deals are being put
together but tend to be at around 10% below peak boom
prices. The challenge to sellers is to get smart and accept
this new reality. The best price sellers can achieve has
fallen - though they won’t lose out if they are
then planning on buying as well."
Nationwide
Records Falling Mortgaged Sale Prices
Nationwide
also published their latest house price index this week,
which found that the average asking price for a home in
England and Wales fell by 0.6% in March - bringing the
rolling annual increase down to just 1.1%; considerably
below inflation.
Leaving
aside the fact that an increase below inflation is effectively
a fall in real terms, the contrast between Nationwide's
falling figures and Rightmove's rising figures reflects
an uncomfortable truth for many sellers. Asking prices
are being negotiated down, and real selling prices are
falling in the current market.
Commenting
on the results, Nationwide's Chief Economist Fionnuala
Earley said that "If prices were to fall in line
with consumers’ expectations, they would still be
higher than two years ago. A moderate fall in prices at
this stage should not be unwelcome and should help to
ensure greater stability in the market going forward."
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