THE RIGHT MOVE - ABROAD? From NewSkys

In the UK, average asking prices for property fell by 0.2% (£367) this month, creating awareness that now may be a good time to buy overseas rather than into a poorly performing domestic market.



Asking house prices in the UK have now dropped for two consecutive months by a total of £2,360, or 1.2%. This month’s measurement of 118,000 new sellers to the market shows there is increasing realism on prices. Last year’s peak in prices was £196,198, in July 2004.

Average asking prices now are only £84 higher - an effective standstill over the past 13 months. The year-on-year rate of increase has gone up slightly to 2.1% due to a large decrease in August 2004, which has now worked its way out of the year-on-year figure.

The high level of competition from other properties on the market is forcing new sellers and their estate agents to maintain the ‘summer sale’ mentality, in spite of some tentative signs that the market is recovering. The number of properties for sale per Right Move branch grew from 71 in July to 72 this month, keeping the market heavily weighted in favour of the buyer.


There is further evidence that property transaction volumes have reached the bottom of the trough for this housing market cycle. The Land Registry figures for April to June 2005 show transaction volumes at the lowest level for seven years. This does however represent a 36% increase compared to the previous three months and is the second largest percentage recovery in 10 years.

In the aftermath of the boom, there are now clear signs that the market is making sensible adjustments in prices to improve buyers’ affordability. It has taken 12 months with a peak of interest rates at 4.75%. This contrasts greatly with previous post boom highs.

In 1979 interest rates stood at 17% for nearly a year, whilst in 1989 they levelled at 14.88% for a similar period. The lower peak this time round minimises the number of distressed sales, though from the housing market’s point of view, the cut in interest rates was long overdue. Buyer’s confidence should be boosted by the rate cut along with affordability improvements from recent falls in asking prices. In spite of this, many sellers will have to wait to see the level of interest amongst prospective buyers when they return from holiday in September.


Miles Shipside, Commercial Director of Rightmove, comments “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. There is too much unsold property still available to expect anything other than a continuation of static asking prices this year.

 

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

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