Guaranteed rent | House sellers have cut their asking prices by the largest amount in the month of July for four years, a study said today.
The 1.7% or £4,138 drop comes amid a summer of “miserable†weather for viewing homes and new sellers coming to market are outnumbering actual sales by two to one, according to property search website Rightmove.
Typical asking prices for the UK property market tumbled to £242,097 in July, the biggest fall for that month since July 2008, although prices are 2.3% higher than they were a year ago.
The fall is also the first monthly drop since January and the biggest since December last year.
Strong competition among sellers will make selling a home “challenging†over the summer months, the report warned.
The survey comes just days after the Halifax said prices in some parts of Cardiff are back to 2005 levels, while in some areas of Pembrokeshire they are returning to levels seen 12 years ago.
But the Royal Institution of Chartered Surveyors (Rics) said the Welsh housing market stayed flat in June, with estate agents blaming banks for the lack of activity.
North West Wales estate agent Melfyn Williams said the falling asking prices were an indication of a greater realism on the part of sellers.
The co-director of Williams & Goodwin said everything from the bad weather and the Queen’s Diamond Jubilee celebrations to the ongoing crisis in the eurozone have resulted in the market slowdown.
Mr Williams, a past president of the National Association of Estate Agents, said: “Basically it’s realism. A lot of sellers have been putting their houses on the market with a little bit of hope in their asking prices. They’re now having to realise that the houses that are selling are the ones where owners are being realistic and pricing to today’s market.â€
The West Midlands was the only region in England and Wales to record a month-on-month increase in July, with a rise of 2% to reach £191,121.
London, which regularly records stronger price rises than the rest of the country, saw the biggest monthly fall, with a 3.6% drop taking asking prices to £460,304. However prices in London are still 6.4% higher than they were a year ago, and the English capital recorded the biggest annual rise of all the regions.
The study said sales are running at 56,220 a month on average according to Land Registry figures, while Rightmove, which covers 90% of the market, has seen more than 102,000 homes come on the market in the same period.
This means the number of properties coming to market is around double the number of completed sales, and with the distraction of the Olympics and ongoing economic uncertainty, the market will continue to be tough, the report warned.
Cardiff University economist professor Patrick Minford said there is a “real problem†in the economy with credit and the interest-rate fixing scandal that’s engulfed Barclays is making the banks still more cautious.
Professor Minford, a former adviser to then Tory Prime Minister Margaret Thatcher, said: “They [the banks] are terrified now of court cases and regulatory and political responses.
“And, of course, it’s not helped by the general eurozone crisis in the background.â€
Rightmove director Miles Shipside said: “Those keen to sell this summer have the challenging confluence of miserable viewing weather, the continuing credit crunch plus a sporting distraction of Olympic proportions.
“Those who have been on the market for many months might consider the prospects of achieving a sale to be somewhat of an Olympian challenge given that actual sales completions are just half of what they were five years ago.
“The weather might not be hot but in most parts of the country the competition to sell is.â€
The study said the number of unsold homes per estate agency branch is “stubbornly high†at 75, and stock levels have risen for five months in a row as new sellers continue to outstrip the number of homes sold or taken off the market.
In the year before the onset of the financial crisis, the number of new homes coming to market outstripped sales by a smaller margin of 25%.