Property market 'slows despite rate cut'

Property market 'slows despite rate cut'

This follows a decrease of 1% in July, meaning prices have fallen by a total of 1.2% (£2,360) since June according to Rightmove's August house price index.

The average asking price is now £196,282, just £84 higher than in July 2004. The annual increase for this time in August is slightly higher, at 2.1%, but this is due to a slump in mid-August 2004.

Some 118,000 new sellers have had to adjust prices down this month due to an oversupply of houses on the market. The number of properties for sale in each estate agent in the country grew from an average of 71 in July to 72 in August.

Rightmove takes its monthly readings for house prices in the middle of the month, so its "August" reading is in fact for mid-July to mid-August.

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The survey also showed that completed sales for April to June were the lowest volume since 1998.

But Rightmove said that there were indications that market conditions are improving, noting that sellers were making "sensible adjustments in prices to improve buyers' affordability".

The "overdue" interest rate cut to 4.5%, said the property website, would also boost buyers' confidence, although this would not lead to a rise in prices, because of the "abundance of unsold property".

"Activity will pick up but higher prices will not be achieved until more first-time buyers can afford to get on the property ladder," said Miles Shipside, commercial director of Rightmove. "However, that's still some time away and requires a continuing downward movement in interest rates."

Mr Shipside said that sellers had to be realistic about the price they could achieve for their properties.

"More estate agents are declining to market properties if the seller wants to try for too high a price,

"It's a tough message to sellers, but if an estate agent has already got similar or cheaper properties that are not selling, they are thinking 'why have more?'.

Mr Shipside said he expected a continuation of static asking prices this year because of the high number of unsold properties.

"Although buyer demand appears to have picked up, property stocks are still at historically high levels," he said. "In most parts of the country it will therefore remain a strong buyer's market until at least the spring of 2006."

Howard Archer, economist at consultancy Global Insight agreed that sellers had to be realistic about asking prices.

"The Rightmove housing market survey for August is relatively subdued overall, showing that it remains very much a buyers' market as the supply-demand balance is currently slanted markedly in their favour," he said.

"The survey also reinforces the view that sellers are becoming more realistic in their pricing, which will support levels of housing market activity."