This is according to the latest Rightmove House Price Index which shows that that heavy falls in the previous two months have still left sellers with a deficit of 3.0% (£7,255) over the three months of the summer downturn, which this year was again exacerbated by stagnant market conditions.
This month is the third anniversary of the collapse of Lehman Brothers, which triggered the freeze in credit markets and wholesale mortgage funding. Rightmove says it is concerning that many of its key metrics have not changed since then—indicating that recovery still remains on hold until the lending squeeze eases.
Given these market conditions and the 94 day average time a property is on the market, sellers seeking to tie up a deal in the 98 days left before Christmas need to take action now to undercut and out-promote their competition.
Commenting, Miles Shipside, director of Rightmove said: “New sellers are asking £7,255 less than they were three months ago, trying to strike a balance between maximising their returns and grabbing a buyer in the brief autumn selling season. Many buyers hope to move in before the Christmas break. With less than 100 days left before Christmas there’s an opportunity for some deadline-focused movers to do their bit to get some action into a market that is still pretty moribund three years after the financial fiascos that precipitated the downturn.”
Agents report that one of the reasons why the market lacks momentum is that prospective buyers do not feel any urgency to make an offer and conclude a purchase. However, prospective buyers looking to move before the festive season should note the short timescales involved.
A further and more financially significant deadline is the ending of first-time buyer stamp duty relief on the 25th of March next year. The nil-rate threshold will fall from £250,000 to £125,000, so first-time buyers should be aware that they must have completed their purchase by that date to avoid paying stamp duty of 1% of their purchase price.
Shipside added: “It’s a tight but feasible deadline to find and be in a new home for Christmas. The stamp duty relief has more teeth to bite you in the pocket if you miss it, but that is a tasty incentive as long as you beat the deadline. There are a couple of opportunities here to get a sense of urgency into buyers, something that’s been sadly lacking since the collapse of Lehman’s put a seemingly indelible blot in the financial landscape”.
The number of properties coming to market this month compared to September 2008 is equally subdued, with a weekly run-rate of 23,412 this month, just 1.2% higher than the 23,131 in the same month three years ago. Forced sales remain low, so the market has not yet been forced to address the affordability issues that are preventing many would-be buyers from taking a more active role.
Shipside said: “The good news is that low interest rates and static prices are keeping most of them out of the clutches of negative equity and forced sales, but those factors are also delaying a return to affordability and liquidity that would help to get the first-time buyer and volume markets moving again.”
New sellers’ average asking prices are also little changed compared to September 2008, when the average price of a property coming to market was £227,438. In spite of three years of unresolved financial uncertainty, this September’s sellers are asking £233,139, a difference of just 2.5% or £5,701. In the previous three year period from 2005 to 2008 prices went up from an average of £195,407, an increase of 16.4% or £32,031.
The relative shortage of property coming to market continues, helping to underpin prices. The improvement in new seller numbers measured in September 2010 now seems to have ebbed away, with the number recorded this September 10.3% down on last year. This is keeping in check the average unsold stock per estate agency branch which remains in the high 70s, though it is slightly up from 76 three years ago to its current level of 78 properties.
Shipside commented: “It’s a delicate balance between the markets not being flooded with sellers desperate to sell and having enough of them to bring prices down to more affordable levels and encourage more buyer activity. Although local markets vary, at a national level it still seems that sellers have the upper hand in being able to hold out for higher prices. Buyers can retaliate by not buying, but do not have the power to force many sellers to take lower offers. The result is a stalemate and continuing stagnation in the number of sales transactions and successful moves.”
