Oversupply, budget cuts and tighter lending have all contributed to three straight months of falling asking prices on UK real estate for sale, eroding earlier gains. Although signs of a slowdown in new supply may prevent a double dip, sustainable property price growth could be delayed till 2012 or beyond. See the following article from Property Wire for more on this.
Predictions from analysts and commentators that property prices in the UK would fall in the second half of 2010 are backed up by the latest data published today (Monday September 20) that show declines over the last three months.
Property asking prices in England and Wales fell for a third consecutive month in September and have lost half the gains they made in the six months of the year, the latest data from property website Rightmove shows.
Asking prices fell 1.1% this month, following drops of 1.7% in August and 0.6% in July. This means that the annual rate of growth dropped to 2.6% from 4.3%.
Seven out of 10 regions tracked by the property company showed falling asking prices, led by a 4.4% drop in the East Midlands. Values in London fell 1.5%, led by an 8.3% decline in Hammersmith and Fulham.
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Rightmove said the weekly average of properties listed for sale in September fell to 26,000, the lowest since April. The reading exceeded 30,000 in June and July, and has held above 25,000 since March.
The average unsold number of properties per real-estate agent held at a record high of 79 this month, Rightmove said.
Rightmove’s findings are in line with other surveys showing house prices have stumbled in recent months, something commentators have blamed on increasing supply and nervousness ahead of large government spending cuts.
A pickup in the supply of homes for sale is putting downward pressure on prices, while curbs on lending by banks crimped demand, Rightmove said. ‘The surge of extra stock has left the market with a real supply hangover. Sellers’ attempts to hold onto price gains made earlier in the year have suffered from a relentless stream of fresh property,’ explained Miles Shipside commercial director of Rightmove.
He said that September’s survey could be interpreted in different lights. ‘The double dippers will be able to point to a clear downward trend, with new sellers dropping their asking prices for three months on the bounce. Conversely, we are also recording the lowest weekly run rate of fresh sellers since April. This will give some ammunition to those forecasting a flatter price trajectory as it could be an early sign of fresh supply beginning to wane,’ he added.
According to Nick Hopkinson, director of Property Portfolio Rescue, believes the indices do not give a true picture. ‘Outside prime London where supply is very limited, it is difficult to find properties that ever really saw price gains in the last year anyway,’ he said.
He believes that lack of lending and the uncertainty of ‘austerity Britain’s’ budget cuts to be announced shortly are enough to guarantee that prices will drop further in the next few months.
‘If you add in the ongoing concerns over inflation, the threat of interest rate rises and that average household incomes are already being squeezed; it is hard to see on what basis house prices could ever have grown sustainably this year,’ he explained.
‘I don’t expect a sustained house price recovery until 2012 at the earliest and that will still depend on how interest rates and the national debt burden unfold. When even the estate agents are saying prices are on the way down, anyone considering selling their property should act fast and ensure they are being real about the price they can achieve,’ added Hopkinson.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.