Rightmove: Realistic sellers drop prices by £1k

Miles Shipside, commercial director of Rightmove, said: "For the equity-rich, 2009 has turned out to be the year of the property deal.

"Those with a good deposit and a stable job are now finding they can afford a better property than two years ago.

"This puts them in pole position to snap up the short supply of saleable property in the most popular areas. The south appears to be leading the way in terms of increased activity as it has a higher concentration of the mortgageable equity-rich, which conversely means property coming onto the market is in shorter supply as there are fewer forced sellers."

The shortage of new sellers continues, though there has been a modest increase of around 10% compared to the previous three months. There is evidence of a real north-south divide.

The number of new sellers in the southern regions of the South East, South West, East Anglia and Greater London are down by 45.3% on the same period in 2008, while the rest of England and Wales has seen a 40.1% fall.

A combination of lenders’ risk bias towards southern deposit-rich buyers and less fresh saleable stock would therefore suggest a speedier price recovery in the south, Rightmove said.

The potential for future price rises is particularly marked in Greater London where the year-to-date supply of new-to-market properties is down 52.3% compared to the same period in 2008.

By contrast the "North of England" region has seen 33.8% fewer properties coming to the market, helping maintain supply and
keep prices depressed. This is reflected in average falls in initial asking prices being greater in the North of England region, with the largest annual decrease of 10.5% (£16,648), while new sellers in Greater London have only marked their asking prices down by 0.5% (£1870).

Shipside said: "It’s a mistake to confuse the upturn in inquiries and sales with a return to a more normal market. While conditions are much improved on the darkest days of last year, we are now starting to see some big distortions and wild swings due to the combined effects of recession and restricted mortgage availability.

"As the best deals on property and mortgages are only open to the equity-rich, the new stock that agents are looking to attract has to match what these purchasers want to buy and can afford. Perennially popular areas with good schooling are in, while flats in large blocks and terraces requiring major works are out, meaning new sellers are having to adjust prices accordingly."

The hesitation in asking prices after four consecutive monthly rises appears to highlight that, while new stock remains in short supply, new sellers are having to vary their prices to match local buyer demand.

Initial asking prices for detached properties are down only 5% on a year ago for example, whereas Rightmove is recording the highest fall on terraces, which are 7.4% down.

With lenders demanding larger deposits, and with both lenders and mortgage surveyors being more conservative, a run-down terrace which might require a retention against the mortgage advance until renovated is not as saleable as one already

Similarly, a mortgage valuation on a flat in a large block will be marked down substantially if there is evidence of repossessed properties within the block being sold at fire sale prices.

A large rump of less saleable stock remains, with average stock per estate agency branch remaining stubbornly consistent at just over 70 for the last six months.

Shipside said: "Interest rates for fixed-rate mortgages are now increasing, in line with money-market expectations of higher medium-term interest rates. Property deals appear within the grasp of cash-strapped first-time buyers, but every rise in fixed rates frustratingly nudges them a bit further out of reach.

"Lenders need to be wary not to choke off the recovery in affordability and activity by punishing the returning buyers with ever-widening margins."

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