Buying opportunities on the way to the bottom of the market are traditionally more plentiful than those on the way up, and sellers are more open to low offers.
There are reports that agents are now struggling to handle the record volume of inquiries, having cut their staffing levels in order to survive.
Potential buyers at present seem to be just testing the water however, with some agents reporting 40 or 50 viewings per
weekend with no resulting offers, potential buyers are understandably cautious and their intention to buy is also frustrated by continuing constraints on mortgage availability.
Miles Shipside, commercial director of Rightmove, said: "Estate agents always deal with a vast number of inquiries, often needing to register 100 applicants for every successful sale. However, current pent-up demand is being frustrated by banks, building Societies and, indeed, the taxpayer contributing insufficient funds to potential borrowers.
"That leaves a shrinking number of lenders who are cherry-picking the most credit-worthy borrowers, whilst arguing amongst themselves as to who is to blame for this crisis as opposed to solving it.
"Some agents report only one deposit-strapped inquiry in 40 being able to get a mortgage, with current deposit and income multiple restraints singling out aspiring first-time buyers.
"Unfortunately, the current inquiry feast is being blunted by the mortgage famine. While leaving a great opportunity for the cash-rich to strike a deal, it also highlights the extent to which the financial sector needs to put its house in order
before market recovery can truly begin."
Meanwhile nine out of 10 home movers believe it is a "bad time to sell", yet falsely optimistic New Year sellers are still following the seasonal trend and raising asking prices by 1.2%, according to Rightmove’s February House Price Index.
A year ago, new sellers coming to the market could be forgiven for not foreseeing the strength of the downturn in market conditions and raising initial asking prices by a massive 3.2%.
According to Rightmove it could, therefore, be said that the New Year sellers of 2009, with customary spring optimism and time on their side, have shown considerable restraint by raising them a mere 1.2%.
However, launching their properties onto the market at an average of £2,593 higher than the month before flies in the face of consumer sentiment.
In the recent Rightmove Consumer Survey, 9 out of 10 potential homemovers clearly stated it was "a bad time to sell".
It also temporarily defies the expectation that prices have further to fall, though Rightmove’s analysis of this month’s other key statistics puts this rise into context and gives further insights into the likely course of the housing market in 2009.
Shipside said: "In spite of 25,000 out of 28,000 potential homemovers in the Rightmove Survey stating it was a bad time to sell, sellers appear to have ignored their fellow homemovers’ assessment of market conditions and put prices up.
"While sellers have been more conservative in their New Year bullishness than last year, they may regret not pricing more
aggressively to capitalise on the spring surge in buyer interest. Sales are being achieved at around 25% below peak prices, yet new sellers coming to market are starting out asking an average of only 10% less.
"Serious sellers need to set their initial asking price more realistically to get one up on the competition and take advantage of increasing numbers of bargain-hunters who have set their own price floor ahead of the return of mainstream purchasers.”
The smaller than usual February rise has led to a substantial fall in the annual rate, with initial asking prices now 9.1% below those of a year ago, compared to 7.3% the previous month.
This is the largest decrease that Rightmove has ever recorded.
Rightmove forecasts that monthly changes in asking prices will return to negative territory over the coming months, resulting in an overall fall of 10% during 2009.
However, as this is an average, it fails to highlight individual properties marketed at considerably below peak prices, often when sellers are being forced to sell quickly.
The number of sellers coming to the market remains at record lows however, with only 75,140 properties measured this month compared to 137,442 at this time last year.
Shipside said: "New sellers are 45% down compared to February last year. In spite of these being ideal trading-up conditions, discretionary sellers are being deterred by uncertainty over mortgage finance and employment, while pending repossessions were delayed by an informal Christmas amnesty.
"Repossessions are still concentrated in relatively few areas of the country, though unfortunately record numbers are rumoured to be in the pipeline with some auction houses scheduling several ‘pile them high’ auctions.
"The availability of good quality property at distressed sale prices is likely to present a wider choice for owner-occupiers as opposed to just investors."
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