U.K homeowners have raised the prices of their properties this month because they are not “realistic” enough about the housing market, Rightmove plc said.
According to Rightmove, the average asking price rose 1.2% from April to £242,500 or ($473,000
May 14, a new poll predicted that UK housing prices will fall 5% this year and that market analysts believe it could get worse as a result of the soaring consumer inflation which limits the scope for interest rate cuts.
The poll conducted by Reuters further indicated that the annual basis varied from a 10% fall to a 2.9% rise with a median forecast of a 5.0% drop in UK housing market.
According to the poll of 30 analysts drawn from banks, investment firms and research institutes, nearly a third of the respondents predicted a 10% drop in the poll, which was taken May 8-14. The median compares with that of a 0.8% in a Reuters survey in March, highlighting the deteriorating outlook.
But according to Rightmove, prices in London increased 0.2%. On the year, the cost of a U.K. home rose 2.2%.
Rightmove’s commercial director Miles Shipside told Bloomberg, “Not enough sellers are coming onto the market with realistic prices and it's the wrong tactic for the current set of market conditions.”
He added, “There’s far fewer mortgages around, buyers are in more limited supply. It's a tough market that's likely to continue for some time.”
The company said homeowners raised prices the most in the South East of England, where the cost of a property rose 4.2 percent on the month. It also pointed out that the East Midlands and East Anglia had recorded the biggest declines, both with a 1.5 percent price drop on the month, Rightmove said.
Indicators based on agreed selling prices show that the value of homes dropped in April from a year earlier for the first time since 1996 and Bank of England Governor Mervyn King says they are ``likely to fall further.''
Last month, in a desperate bid to curb lending, banks resorted to raising the cost of their most favored mortgages sending them to a record, eight-year high.
But the move did not go down well with market as more homeowners found it difficult to finance their property purchases.
London’s southern Kingston area was trop of the leader board with prices rising 3.9% from April while the central district of Westminster was up 3.2% according to figures released by Rightmove.
The statistics however, show that certain parts of London were experiencing a drastic drop in pricing with Hounslow, near London’s Heathrow Airport as the most affected area having recorded a fall of 4%.
“People are asking too much for their properties in current market conditions,” Rightmove's Shipside said.
On May 2, HBOS Plc, UK’s biggest mortgage lender estimated that based on agreed transactions, home values dropped 0.9% from a year earlier, the first drop in more than a decade.
The Royal Institution of Chartered Surveyors said May 13 that property agents and surveyors reported London was leading in widespread price declines in at least 14 years last month.
House prices will fall about 5% this year, and the number of transactions may drop 40% if the seizure in credit markets doesn't abate, RICS said today.
In March, banks approved 64,000 home loans, the lowest amount since at least 1999. The average rate offered by lenders on a mortgage for 95% of the price of a property, fixed for 24 months, rose to 6.94% in April, the highest since February 2000, Bank of England data show.
Shipside said, “It's a very tough market for both estate agents and sellers,”
He added, “Those who do remember the tougher times have shed a lot of staff. There are estate agents closing.”
