More potential home sellers are preparing to take their properties off the market because of huge falls in sales and reports of a further one per cent drop in the average asking price in September.
Research from property website Rightmove.co.uk has found that, while the one per cent fall in the average asking price is less drastic than the 2.3 per cent fall seen in August, it has continued to fall for the fourth consecutive month and is still a considerable 3.3 per cent lower than at the same time last year.
The average asking price now stands at £227,438, and the continued decline in value is prompting would-be sellers to hold off putting their homes on the market. The fall in value adds insult to injury for homeowners after last week's news that the cost of mortgages
could soar again due to a rise in the cost of the Libor – the rate at which providers lend to each other.
"The housing market is in limbo and will remain so until financial institutions address the disastrous state of the mortgage funding markets." commented Miles Shipside, commercial director of Rightmove. "We are now seeing the lowest level of new sellers for years."
A number of industry experts have predicted that the number of homes for sale will fall further as homeowners seek to dodge further cuts in the asking price. While the fall in value of properties and the increase of unsold properties currently on the market have been encouraging bargain-hunters, this is expected to decrease with the latest round of pain from the global credit crunch.
Despite Gordon Brown's decision to suspend stamp duty on properties worth less than £175,000, the number of properties on the market with an asking price between £125,000 (the previous threshold for paying stamp duty) and £175,000 has only increased by 0.5 per cent this month.
The research suggests that the stamp duty
reform has not had the Government's desired affect – to encourage more people to buy or sell their homes, and therefore boosting the housing market.
"The changes in stamp duty are just tinkering at the edges of the system," said Mr Shipside, adding that at best it will "give slightly more choice to first-time buyers who will be able to put the 1% that they save towards the minimum 10% deposit that they are now likely to require."
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