After a red hot start to 2006, confidence slipped for the first time in six months so on average, house hunters have slashed their expectations for property prices over the next year from 7.7 per cent in May to 4.3 per cent in June. 78 per cent of respondents expect the market to rise over the next twelve months, still a healthy proportion, but down from the 84 per cent seen in May. This is the first such drop since December.
Buyers pitch their offers low
While asking prices may have been rising all year, buyers have begun to respond by demanding bigger discounts when making offers – an average of 6.1 per cent below the asking price during June compared to 0.7 per cent in March. This is the lowest point in over nine months. Those buying property for investment purposes are the toughest as they are driven by investment returns, not the emotional considerations of owner occupiers.
Investors are making offers averaging 10 per cent below the asking price. First-time buyers are also driving a hard bargain offering 6.3 per cent below the asking price, perhaps because they have the tightest budgets. Those who are moving home are more generous, offering on average 4 per cent below the asking price.
Warren Bright, chief executive officer of Propertyfinder.com, said: “Buyers are clearly backing away from high asking prices. At the peak of the recent mini-boom, they were prepared to pay almost the full price, but the picture has changed rapidly. These figures show that asking prices are not a reliable guide of where the market is heading. As market conditions change, the prices actually paid can diverge significantly.”
Buyer enthusiasm drops sharply
Buyers are trimming their optimism on the market more sharply than sellers. This is a major indication of cooler market conditions to come. Back in May, buyers were significantly more optimistic than sellers which indicated a tight market as buyers were prepared to chase prices upwards. This has changed in June with the two groups much more closely aligned, suggesting a more balanced market.
Propertyfinder warns on interest rates
Bright added: “Fears over interest rates and stock market volatility may explain much of the cooling, but the World Cup effect should not be underestimated. The number of people looking for property on propertyfinder.com fell 35 per cent during the latest England game.”
