Record numbers of properties for sale mean house sellers are increasingly lowering their asking prices by an average of £3,000, new figures reveal.
Low consumer sentiment about the housing market, plus an increasing number of borrowers being turned down by mortgage lenders, means there is a serious dearth of house buyers in the UK. As a result, there are currently one million unsold properties on the market, according to online estate agency Rightmove.
Buyers across the UK are now having to drop their asking prices by an average of 1.2%, or £2,936 - the first drop ever recorded in June. In London, new sellers are dropping their asking prices by around £4,500 as property to buyer ratios hit 15:1.
Areas such as Hounslow, in West London, have seen homeowners reduce prices by an average £20,000.
Miles Shipside, commercial director of Rightmove, says the falls are down to new sellers ignoring the downturn in the housing market, and sticking record asking prices on their homes:
“In spite of the lowest housing transactions for 30 years, new sellers had been coming to the market asking record prices. It was a mad state of affairs that defied the laws of economics,” he adds. “Thankfully, new sellers are now taking some proactive steps to price more realistically from the outset to attract increasingly hard-pressed buyers.”
London and beyond
The picture in the capital is mixed, with sellers in highly desirable areas such as Westminster and Islington seeing their property values increase. However, on the opposite end of the scale areas such as Greenwich, Hounslow and Camden are seeing monthly house prices falls of between 2.6% and 4.4%.
Shipside says: “Areas with more exclusive homes that are in limited supply tend to resist falls for longer than property types that are in greater supply. When more sellers of similar properties are in competition, they drop their prices to attract buyers to choose theirs over others. It is the less desirable areas with more run of the mill homes that tend to fall first.”
Official figures just released from HM Revenue and Customs, show there has been a 32% fall in the number of property sales so far this year. In the first five months of 2007, there were 743,000 sales of properties worth over £40,000 – in contrast, there were just 504,000 similar sales in the same period this year.
Tips for selling in a slow market:
According to Rightmove, sellers should follows the three Ps in today’s slow housing market.
Firstly, pricing. Sellers need to be realistic when putting a price tag on their property – too high, and you risk putting buyers off. Too low, and you risk losing out.
Shipside says: “Researched pricing will set your home apart from the crowd. The more 'buzz' you create around your home when it initially comes onto the market, the quicker it will sell and the better result you’ll achieve.”
Secondly, homeowners should think about the product they are selling. With any sale, first impressions count so you should make an effort to package your home as a place people can seeing themselves living and therefore want to buy.
Finally, think about the way you promote your home. Rightmove suggests sellers should try and advertise their homes as widely as possible, using anything from estate agents to local papers and online services.
For more advice on beating the downturn, find out how much your home is really worth and read the Moneywise guide to selling your home in a slow market.