Bewilderment as asking prices for houses bounce
Monday 18th October 2010
New asking prices on Rightmove have jumped an astonishing 3.1% over the last month, the site reported this morning.
The rise is in seeming defiance of market trends and will re-ignite the debate on valuations.
Rightmove said the “seemingly illogical” rise took “some explaining” and is unsupported by market fundamentals.
The 3.1% figure comes shortly after Halifax’s latest report, showing a 3.6% fall in the average prices of properties across the UK in September.
The average new asking price on Rightmove is now £236,849 – which is hugely disjointed from the Halifax’s figure of £162,096.
Whilst Nationwide reported a very slight (0.1%) rise in prices for September, its average national house price of £166,757 is not far adrift from Halifax.
The breath-taking rise in new asking prices on Rightmove comes after measuring the asking prices of 105,769 properties new to the market. In previous Octobers, asking prices have jumped 2%. The 3.1% rise equates to an average of over £7,000 in a month.
It appears to be the clearest sign yet of over-pricing.
In London, Rightmove said this morning that asking prices of properties new to the market have shot up by 5% in the last month.
But large numbers of houses in London are not selling, and prices are having to be cut. Ivor Dickinson, managing director of Douglas & Gordon, said his firm did 33% fewer transactions in September than a year ago and that asking prices are down by 10%. He said buyers should not be afraid to make “bold offers”.
Generally, market fundamentals, says Rightmove, “remain poor as property per branch rises from 69 in October last year to 78 now, and mortgage availability continues to deteriorate. However, 105,769 new October sellers asked a seemingly illogical £7,082 more for their homes than last month’s sellers. Why would new sellers test the market at asking prices 3.1% higher than a month ago?”
The site said that whilst bullish pricing is a normal autumn characteristic, vendors are struggling to react to new market conditions and, post-HIPs, are now testing the market at minimal cost.
Rightmove commercial director Miles Shipside said: “Given the challenges of the current market, the behaviour of sellers in raising their average asking prices by over £7,000 takes some explaining.”
He said one possible explanation was that sellers are not experiencing high levels of financial stress, but cannot afford to move unless they make their sums stack up.
But most sellers, said Rightmove, are doomed to disappointment, pointing to near-record stock levels and deteriorating mortgage availability.
Shipside said: “Some estate agents are showing a much stiffer resolve than others about the price they are recommending.
“For some agents and sellers there is the temptation to launch to the market at a speculative price, knowing one can always reduce it later.
“In these stock-rich, buyer-poor times, such a strategy stands minimal chance of success for the vendor. However, the agent that wins the instruction to sell in the first place is often able to keep the seller exclusively on their books while recommending a series of price reductions to try and get the price to a more saleable level.”
But he warned that the market can easily be “lost for good” if the launch pricing is wrong. Rightmove statistics show that interest in a property drops away sharply after the first week of marketing.
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