The ratio of home buyers to sellers has fallen dramatically, according to Rightmove, with just one buyer per 15 sellers in June compared with an average of 7.1 sellers to each buyer last June.
The property expert's latest House Price Index – which measures around 90 per cent of the UK market – shows that average asking prices also fell by approximately 1.2 per cent, or £2,936, in June to £239,564 compared with £242,500 in May. The drop has been attributed to higher mortgage
costs, which are acting as a deterrent to potential home buyers.
The most significant monthly price drop was seen in the south east, with average prices falling 2.4 per cent to £308,828 compared with £316,521 in May. At the opposite end of the scale, average prices in the north rose 0.5 per cent from £157,314 in May to £158,078 in June.
On an annual basis, the biggest drop occurred in the East Midlands, with average prices down 3.5 per cent to £175,533 compared with £181,851 in June 2007. However, average prices in Greater London were up 2.9 per cent year-on-year to £399,010 compared with £387,898 in the same month last year.
Commercial director, Miles Shipside, said: "In spite of the lowest housing transactions for 30 years, new sellers had been coming to the market asking record prices.
"It was a mad state of affairs that defied the laws of economics. Thankfully, new sellers are now taking some proactive steps to price more realistically from the outset to attract increasingly hard-pressed buyers."
According to Rightmove, sellers will be forced to make further reductions to asking prices because of the oversupply of property. Furthermore, economic pressures are pricing many potential buyers out of the market, with living costs exceeding wage rises. Higher mortgage rates
and lack of mortgage availability have also contributed to the decline in buyer numbers.
Mr Shipside added: "Lenders are trying not to lend right now and are just cherry-picking for profit. With approximately half the mortgage funds available, homes have to stand out to attract the half of buyers that can still buy. For most sellers that will mean whatever they thought of asking for their property at the peak of the boom, they need to take at least 10 per cent off. Otherwise, their property will stagnate."
He continued: "Sellers need to discuss the 3 Ps - Pricing, Presentation and Promotion, with their agent. Pricing has to be below the competition and presentation of their property has to be the most attractive on the street. Having got those two basic elements right, it is then crucial to promote the property to really stand out from the rest."
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