A buyers strike is holding the property market to ransom, according to one new report
House prices fell for the seventh month in a row, and average prices were down across half of the country, with the average fall 0.6% for April, says the latest report from Hometrack.
Having reported a pick up in sentiment in February and March, this positive trend has ended, as fewer sales in April combined with decline in applicant numbers make for larger falls than previously seen this year.
Vendors looking to sell are commonly dropping percentages off their asking price: a year ago 95.7% of the asking price was being achieved, while now this has fallen to 93%, the lowest figure since January 2005, with the greatest falls taking place in London.
Uncertainty amongst buyers and would-be movers continues to have a detrimental effect: While the availability of finance is impacting on demand in certain segments, the reality is that weak confidence is effectively resulting in a buyers strike with households sitting on the sidelines and waiting to see how events unfold, said Richard Donnell, Hometracks director of research. Transaction volumes will be the big casualty and there now seems the prospect of a record low in residential sales volumes in 2008.
Much of the slow nature of the market is attributable to caution rather than worries about financial disaster, Hometrack also observed. The falls are likely to be seen where prices have risen most, specifically London and the South East, whereas counties in the North of England have been undergoing a price correction since 2005, Mr Donnell continued.
The current downward pressure on prices will only start to be reversed once there is a turnaround in buyer confidence, he added. The timing of which is almost impossible to predict but will revolve around greater stability in the financial markets and an improved economic outlook.