People attempting to sell their homes have cut the asking prices for the first time this year, says the property selling website, Rightmove. It says that asking prices dropped by 1.6% this month – or an average of £3,797 per property.
At the quoted £236,597, average asking prices far exceed selling prices; the average selling price calculated by the Department for Communities and Local Government (DCLG) is £203,528. Small wonder then, that only 70% of all homes put up for sale in 2011 have yet to find a buyer.
The data above suggests that sellers and estate agents are over-valuing house prices by 16%, which sounds about right for an asking price.
However, when examining the house price indices of the two big mortgage lenders, Nationwide and Halifax, the gap between asking and selling prices gets a lot bigger. The Nationwide shows the average house price currently standing at £168,205, whilst the Halifax quotes £163,049; that’s a difference of 41% and 45% respectively from the average asking price of £236,597.Miles Shipside of Rightmove was clearly not in a positive frame of mind when he summed up the current findings: “Many equity-poor aspiring sellers will be trapped in their current homes, either unable to come to market or stuck on the market and unable to reduce to a price that will attract buyer interest.
With seven out of ten properties marketed so far this year still on the market, sellers in the second half of 2011 need to do something different to promote their property and increase their chances of catching those elusive buyers.Not surprisingly this data from the estate agents comes at a time of continued subdued mortgage lending.
Although it picked up in June, it is still lower than it was 12 months ago, say the Council of Mortgage Lenders (CML). Total mortgage lending in June was £12.9bn, up by 16% from May, but down 3% on June 2010. The sustained lack of lending was put down to the poor state of the economy and ever-squeezed household finances. The CML also said that although recent media coverage of repossessions had been overplayed, they expected to see an increase in mortgage arrears and repossessions throughout the remainder of 2011.