House sellers forced to cut asking prices as pool of buyers dries up

House sellers forced to cut asking prices as pool of buyers dries up

People selling their homes have cut the asking price by an average of more than £4,300 in the past month to catch the eye of a dwindling number of buyers, according to a report published today.

The latest monthly survey from the property website Rightmove says the number of unsold properties has reached record levels as the market grinds to a halt. The report says the average asking price in England and Wales has dropped to £235,219, down from £239,564 in June. That was the second monthly fall in succession after a drop of £3,000 in June.

Mark Shipside, commercial director at Rightmove, said: "Sellers are finally recognising that they need to undercut their rivals from the outset, rather than testing the market and dropping prices later. Sellers' pricing needs to be at the level where deals are being done. It could be a lot better outcome to price aggressively and sell now, rather than accept a bigger reduction later as prices continue to fall."

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The Rightmove survey culls information from estate agents and claims to measure 90% of the market. It said estate agents had an average 77 properties for sale, up from 74 in June - the sixth monthly increase in a row. But the rise in numbers was not due to new instructions, which are also at historical lows - 30,000 a week compared with 37,000 a week last year. Instead, it reflects the lack of buyers, in large part because the credit crunch has made it more difficult for would-be homeowners to get a mortgage.

Properties are spending an average 87 days on the market before being sold, up from 83 days in June.

Rightmove said the biggest fall in asking prices in July was in the West Midlands, which fell by 3.7% to a little over £192,000. The south-east recorded the second-sharpest decline of 3.3% to £298,700.

The only increase was in Greater London, where average asking prices inched up by 0.3% from June to £400,258. The best-performing London borough was Tower Hamlets, with asking prices up 4.1% to £429,500, followed by Westminster (up 3.1%), Brent (up 2.0%) and Kensington and Chelsea (up 1.9%). The worst performer was Kingston upon Thames, down 2% to an average £514,400.

Shipside said any meaningful increase in the number of homes being sold would need a U-turn by banks over their lending policies. "Banks need to be careful they do not get blamed for a second crash in 20 years," he said.

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