New sellers drop asking prices by 2.2% – Rightmove

Rightmove predicts a burst of activity and asking price gains again in early spring, continuing the heightened level of activity seen during 2009. It forecasts that post-election the housing market will enter a more challenging period.

Miles Shipside, commercial director of Rightmove said: "Those contemplating selling should spend some of the festive break researching their local market before seeking professional opinion very soon after the New Year.

"Time may well be of the essence as the election is likely to be a party pooper. 2009 turned out to be a good time to trade up, and we forecast the positive mood will continue into 2010 until the post-election hang-over kicks in."

Rightmove forecasts that the factors leveraging asking prices upwards pre-election will be countered by negative price forces post-election, the net effect being national average asking prices standing still during 2010.

This is a slight reverse to 2009 where, with just one more Rightmove index to come, it looks like we will see a year-on-year increase of circa 2%. On one level the current year-on-year percentage change of +1.7% is a sign of ongoing price stability, but it hides some big geographic and socio-economic variations. It also masks the risks and challenges always faced by low volume, or "thin", markets as they struggle to return to more traditional transaction numbers.

Shipside said: "The old adage of anything will sell at a price was not true in the winter of 2008 as buyers willing to proceed were scarce and those that had to sell saw their prices tumble.

"At that time few would have predicted a rise in prices. However, sales volumes are still set to remain well down on historic norms, with the consequent thin-market danger of relatively small changes in economic fundamentals having a marked impact on asking prices. We have already seen how some local markets have been adversely affected by over-supply of property and a lack of mortgage ready buyers, and more areas could become similarly blighted if forced sales increase later next year as expected."

The housing market has witnessed some massive changes, but some have perhaps mistaken them for milestones on the way to post-recession normality rather than fundamental structural change. The effects of the paradigm shift in both the wider UK economy and, more specifically, the housing market will not be short-lived.

Some of the characteristics of today’s recession defined market are likely to remain for years to come, meaning the market has fundamentally changed during the last two years. Potentially, this means a fall in owner-occupation, with fewer first-time buyers, more time between trading up, and greater reliance on the rented sector to satisfy housing demand.

Location will be all important in how well insulated an area is from the negative impacts of structural changes to the housing market. More desirable areas continue to see low levels of property on the market, leading to upwards price pressure. Even in these sought-after locations, there are pockets of potential buyers frozen out of the market.

This month sees average stock levels per estate agency branch fall from 69 to 67 properties, the lowest Rightmove has recorded since February 2008. This will give additional impetus to the traditional fresh crop of new year buyers, assisting a buoyant start to 2010 wherever estate agents are stock-starved. These locations tend to attract higher income deposit rich purchasers meaning they are best placed to see prices continue to rise next year. More of these locations are concentrated in the south rather than the north of the country.

Shipside said: "The most recent property to come to the market always creates the most interest and, if priced correctly, has been selling quickly. Smart sellers should do their research on what’s selling around them, and take advantage of the pre-election spring window. Be wary of becoming left on the shelf in 2010 because hanging around for the best price could be a long wait post-election."

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