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House prices fall as sellers dry up

Simon Ward
by Lovemoney Staff Simon Ward on 16 January 2012  |  Comments 13 comments

Rightmove's latest house price report says the number of people selling their homes is at an all-time low.

House prices fall as sellers dry up

House prices have fallen by 0.8% in January, says estate agent website rightmove, as the number of people selling their homes falls to a record low.

The first week of the year saw a 1.4% increase in asking prices, which rightmove says is indicative of the low number of homes for sale at the moment.

However, it says that a shortage of mortgage finance means that homes that are priced too high won’t sell.

It also highlights the growing trend of ‘micro-markets’ across the country, where prices are driven by specific local conditions that may be very different to those just a few miles down the road.

Regional trends

London continues to buck the national trend, with prices up by 6.1% on January 2011. East Anglia (6%), Yorkshire and Humberside (3.8%), the south east of England (1.5%) and the north of England (0.4%) are the other regions that have seen some annual growth.

At the other end of the scale, prices in the West Midlands have fallen by 7.9% and by 4.6% in the East Midlands, although the other regions of England and Wales surveyed have seen more modest falls.

Rightmove says the average asking price in England and Wales is now £224,060.

It recorded less than one new listing per estate agent branch since the turn of the year. But it says that online searches on its website were up by 27% on this time last year, which it says is reflective of “pent-up demand”.

Rightmove has highlighted certain groups of people who it says will be the ‘winners’ in the housing market in 2012. They are: first-time buyers who have had some help with raising a deposit, people with a lot of equity in their current home, savvy buy-to-let investors, people selling properties “with a difference” and people selling in places where there is a particularly low number of homes for sale.

People who are renting but cannot afford to buy, people who don’t have a lot of equity in their current property and people selling properties in areas where there is lots of stock but whose properties are “ordinary” will be the biggest losers.

In a recent report, the Bank of England said it believed many mortgage lenders would be tightening their lending criteria this year due to the uncertainty in the economy.

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.

More: How to stand the best chance of getting a mortgage | Mortgage lending to be cut back further

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Comments (13)

  • Mike10613
    Love rating 626
    Mike10613 said

    The way that markets behave depends on supply and demand. If there are more sellers than buyers, sellers drop the prices. If there are more buyers than sellers they put prices up. There are now more sellers than buyers because banks require higher deposits and people are getting wage cuts in real terms. People are also having their saving devalued by quantitative easing and find it impossible to save for a deposit so we have few first time buyers at the bottom f the economic pyramid.

    There are possibly bargains to be had in some areas but most housing is still overpriced. In the stock market there are some stocks still overpriced from the boom years but again there are bargains to be had, if you are willing to take a risk.

    Understanding markets isn't rocket science, but buying and selling in them is risky; that is the nature of capitalism; it isn't for the faint hearted. It is dog eat dog, a rat race where people do have nervous breakdowns and in the 1930's depression they even jumped from buildings.

    Report on 16 January 2012  |  Love thisLove  1 love
  • JRAY100
    Love rating 66
    JRAY100 said

    Fewer sellers, because of depressed selling prices: fewer buyers, because of strict mortgage criteria: stalemate.

    Report on 16 January 2012  |  Love thisLove  0 loves
  • Aquasponge
    Love rating 38
    Aquasponge said

    Most of the 1930 jumpers didn't lose money in the crash. They got in when things were cheap - and cheap got a whole lot cheaper.

    Report on 16 January 2012  |  Love thisLove  1 love
  • Aquasponge
    Love rating 38
    Aquasponge said

    It's 2016 and interest rates of 20% are required to rescue the system. That's a lot of money to clear down within four to five years.

    Report on 16 January 2012  |  Love thisLove  0 loves
  • Max878
    Love rating 37
    Max878 said

    A good time to get into the Buy-to-Let market, if you're lucky enough to be able to afford it.

    House-prices here on the North-West coast are rock bottom - £120,000 for a big 3-bed detached in a quiet cul-de-sac. They're building a windfarm here very soon, so they'll soon be even cheaper.

    Report on 16 January 2012  |  Love thisLove  1 love
  • nickpike
    Love rating 308
    nickpike said

    Conflicting info. Other reports state a stack of sellers and no buyers. These asking price changes don't say much. I'm reading on forums sellers excepting at least 5% off asking price and in cases up to 20%.

    The very high average value represents those with very high equity or own outright selling to each other and haven't a business brain cell between them.

    BTL only gets a return of about 5%, and there's a lot of hassle, maintenance. insurance, agents fees and income tax, on an asset that is going to lose some serious value. Funny how theses people are always referred to as savvy. Stupid would be a better word.

    There's no doubt that prices cannot be supported with all the economic meltdown. I was looking at some nice 4 bed houses (new) in Ireland selling for less than they cost to build.

    Report on 16 January 2012  |  Love thisLove  0 loves
  • yocoxy
    Love rating 152
    yocoxy said

    Asking prices are up 1.4% in the first week of January. By the end of the second week they're down by 0.8% and the conclusion is that "house prices fell in January"?

    There's a difference between asking prices and house prices, there's little value in looking at a single month and yet here you're concluding on the 16th January that house prices are falling after the first two weeks showed opposite trends?

    It must be a slow news week.

    Report on 21 January 2012  |  Love thisLove  1 love
  • LandOfConfusion
    Love rating 67
    LandOfConfusion said

    I'm seeing more and more shops closing in this area (S.E.) with some shop units being replaced by ultra-bargin-basement type offerings. In fact I'm even seeing some strange names which (I'm told) have only ever previously been seen in rundown areas up North.

    Things aren't looking good.

    Report on 21 January 2012  |  Love thisLove  0 loves
  • oldhenry
    Love rating 343
    oldhenry said

    So nobody has a clue what is going to happen, sounds familiar to me . There is only one way to look at a house and that is to live in comfortably. Buy in the best area you can afford, not a declining one. You can usually alter the house but not the area it is in. Also look at the running costs, heating will become horrendous in a few years, council tax , once the freeze is off, will rocket as councillors get back into spending mode. Schools are important as some are rubbish unless you can afford private education ( recommended).

    Report on 22 January 2012  |  Love thisLove  0 loves
  • Marcia9
    Love rating 5
    Marcia9 said

    to old henry

    and all on a decreasing wage ...... should i head for the hills or get some perspective?

    Seriously I would be most obliged if anybody knows of reasonably priced land with outline pp in the South, SE and SW suitable for between 8 and 12 self-builds and would let me know. Modest reward for good lead. Thank you.

    Report on 24 January 2012  |  Love thisLove  0 loves
  • kezzidog
    Love rating 1
    kezzidog said

    Some people will not live within their means, i have a flat that became empty and offered it to my niece and her partner as she is pregenant. I would not have charged any rent to them, but down to them to keep the usual bills in check (Gas, Council tax etc...)

    They politely refused as they saw a Bungalow to rent @ £830 pcm, and was in a "better area" I know their income and they do-not have a lot of spare cash at the end of the month and so therefore will find it impossible to save any sort of deposit to enable them to get a mortgage.

    Yet taking my offer, they could easily save £700 a month and, well people do the math, that would be best part of 20K in 2 years.

    My point being that the younger generation are afraid of buying, yet happy to pay rent at the rate of 70% of their salarys.

    Report on 25 January 2012  |  Love thisLove  0 loves
  • weeaggiebagwash
    Love rating 0
    weeaggiebagwash said

    Would be nice if more of your articles covered Scotland. On many occasions, especially when dealing with house prices etc, all information is based on data from England (and sometimes Wales). Conditions are often very different up here, housing being a prime example. We tend to have a fairly stable market e.g. we didn't have the big 'boom' in house prices in the 80's so no big bust either, very few people have negative equity etc.

    Marica - why not cast your net wider and look at land to build on in Scotland. There's a lot of city people now looking to move out of cities to raise families, enjoy a slower pace etc and, in particular, coastal areas with good transport links (and there are more than you'd think, the West coast is particularly popular as it is the most picturesque and much is within easy reach of Glasgow) are becoming very popular.

    Report on 25 January 2012  |  Love thisLove  0 loves
  • Simon Ward
    Love rating 8
    Simon Ward said

    weeaggiebagwash - I agree but some indices only focus on England and Wales, such as the rightmove one featured in this story. I'm always at pains to point out when an index covers the whole of the UK and when it doesn't.

    Report on 25 January 2012  |  Love thisLove  0 loves

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