by Mark Johnston
It seems that the UK house market is in for more tough times as asking prices see a 3.2% fall. New sellers are asking for an average of £7,500 less than previously.
A recent report published by leading mortgage provider Nationwide backed up unsettling figures from the British Banking Association (BBA) which painted a picture of low mortgages approvals (lowest in the last year and a half), a slow rate of growth and a troubled first time buyer market which has been impacted by the governments announcement of their spending review. Even if when first time buyers aren’t put off by looming job cuts they are finding it practically impossible to find credit.
The figures that showed the 3.2% decreased in October was the biggest drop since 2007. Rightmove, the property website that published the reports said that asking prices in both England and Wales had fallen over the past 5 months which has led to the value of the average house now hitting just over £229,000. They went on to point out that they were concerned about the rising number of unsold properties with very few buyers entering the market.
According to Rightmove, it’s also taking home owners a lot longer to sell their houses, on average it takes just over 100 days to sell a property which is the longest recorded since Rightmove starting tracking data back in 2001.
The report also shows that the number of people putting their house up for sale has reduced by around 9% although with 24,000 new for sale signs are erected each week there wont be a lack of properties for sale. The number of buyers is the main problem facing the UK housing market, or at least the number of mortgages being approved.
Steve Morgan, the chairman of Redow a leading house builder in the UK said: “For generations 95% mortgages have been the norm … Yet the current generation of first-time buyers are being denied the opportunity that their parents and grandparents took for granted, simply because they are unable to secure an affordable mortgage with a modest deposit”. Only a small handful of lenders offer 95% lenders but they are hard to get and come with a multitude of restrictions.
Director of Rightmove, Miles Shipside said: “Agents report that the Christmas slowdown has come early this year, as both would-be buyers and sellers are adopting a ‘wait and see’ policy until the direction of next year’s housing market becomes apparent. The combination of high unsold stocks, the mortgage famine, a shaky economy and the normal winter slowdown gives an ideal scenario for bargain-hunting buyers.”
He pointed out that the usual spike in homes sales just before Christmas is a lot less than past years. This may well be due to the current shortage in mortgages caused by tough new lending rules being imposed by banks and building societies following the financial crisis.
He went on to say: “This month’s large price correction shows that new sellers and their estate agents are beginning to show a heightened awareness of the plight of buyers, but a lot of stale stock is still sitting on the market. Some sellers have lost their motivation to move, but remain on the market hoping for that special buyer to meet their out-dated and inflated price.”
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