The average price of a house has fallen by 2.3% in the past month, says the new Rightmove house price index. Prices in London were hit the hardest, as sellers knocked £21,000 off per month and the average house price has fallen by 5.3%. However these falls still lag behind the rest of the country, with London currently reporting a 3.85% fall year-on-year, whereas the rest of the country is now 4.8% lower in price than August 2007.
The number of sellers coming to market is also very low, 25% lower than Rightmove says it recorded last year while those who have to sell are pricing more realistically. Miles Shipside from Rightmove said: ‘Despite some deals being done at prices that begin to address affordability concerns, the number of transactions this year is in danger of being the lowest since 1959. This raises serious questions as to whether any short-term incentives by individual UK entities, such as the Government or the Bank of England, would be effective in speeding up the market recovery against the backdrop of the global problems of the credit crunch.’
The report also states that the Government needs to be clear on its plans for stamp duty. Following leaks that the Treasury was planning a stamp duty ‘holiday’ to restart the housing market, would-be buyers are holding off while they wait to see whether this is implemented, which again brings down sales volumes.
Short term measures are not the solution, the report claims – instead banks should look at making mortgage finance more easily available: ‘We appear to have very few sound remedies, and all have some undesirable consequences. The lack of mortgage finance is central to the problem, and perhaps that is where policymakers’ attention should be focused, as the banks can’t or won’t sort out the mess they were instrumental in creating. In the meantime, sellers need to continue to price to sell, present their homes to be the best on the street, and promote them better than the rest to really stand out,’ Mr Shipside added.