House prices drop as sellers told to cut prices

Monday 17th November 2008

Average asking prices for homes fell further in November – down 7.1 per cent on a year ago.

The Rightmove house price index now puts the average asking price at £222,979 – down 2.9 per cent on October, with the rate of decline accelerating.

The firm also recorded the lowest level of new sellers – 80,000 – since 2002, as those that hope for a price recovery choose not to put their homes up for sale.

Last year there were 140,000 sellers putting up for sale boards outside their homes.

The fall in prices is being put down to those left on the market being force to knock sizeable chunks off selling prices to lure buyers out of the woodwork.

Rightmove reports estate agents are now seeing selling prices at 20 per cent off the market's peak last year.

Miles Shipside, commercial director at Rightmove, is now advising sellers to put in big discounts if they want a quick sale.

Homes are currently on the market for an average of 87 days – although many are being withdrawn when no buyers appear.

"Some sellers could avoid months of disillusionment and despair if they started marketing at an asking price a lot closer to where the evidence indicates they are likely to end up," he said.

"While average asking prices have fallen by 7.1 per cent over the past year, in most parts of the country you should look to at least double that discount to achieve a sale.

"Not all will be willing or able to consider it, especially those struggling with negative equity. However, those that do will increase their chances of selling more quickly and could cut out the months of asking price reductions to get to the ‘buyer friendly’ price that they could have started with."

While the market looks solemn for buyers, Mr Shipside explained there were opportunities for buyers who were cash rich and mortgage-ready – especially as interest rates are set to fall to record lows.

However, he does point to further price drops if the number of forced sales rises.

"The number of forced sellers is still limited, but it’s potentially a good hunting ground for the bottom feeders whilst the mainstream buyers are still being kept on the sidelines," Mr Shipside said.

"There will be a few real Christmas bargains snapped up in the darker evenings leading up to the New Year.”

He also predicts that when lenders do start to free up mortgages, the market could see an explosion – based on a degree of pent-up demand fuelled by historically cheap borrowing and cheaper property

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