House prices fell by more than £5,000 on average in November, sliding fastest in Britain’s wealthiest towns as Brexit uncertainty gripped the property market, according to the website Rightmove.
In the largest November drop in prices since 2012, Rightmove said the average price of property coming to the market was down by 1.7%, or £5,222, on the month alone. It said the biggest falls were in London, where the typical asking price fell by £10,793 (a fall of 1.7%) and in the south-east of England, where prices were down £8,647 (2.1%).
The “ripple effect”, where rising prices in London spread around the rest of the country during the boom years, has now reversed, said Rightmove, with falling prices in the capital now spreading across the south.
“Higher-end, former hotspot towns are now among the biggest annual fallers with Rickmansworth (-7.1%), Esher (-6.4%) and Gerrards Cross (-6.0%) now cold spots following price rises of nearly 40% over the seven preceding years,” said Miles Shipside of Rightmove.
Rightmove’s price figures often differ significantly from the prices recorded in the Halifax and Nationwide indices as they capture asking prices rather than mortgage data (from the lenders) or sold prices (from the Land Registry). These figures suggest that the recent standoff between buyers and sellers – with sellers not willing to cut asking prices to find a buyer – may now be over.
It said the average asking price for a home in the UK is £302,023, with the price of newly marketed property now 0.2% (-£607) cheaper than 12 months ago.
Anecdotal reports that sellers are listing their property but receiving hardly any viewings and that it is taking much longer to find a buyer are supported by the Rightmove data. It found that the average property takes 61 days to sell, up from 56 days earlier this year, while the number of properties on the books of the average estate agent is 52, compared to 42-47 earlier this year.
The figures echo data from surveyors earlier this month, which said the property market is at its weakest since 2016. The Royal Institution of Chartered Surveyors found that prices were flat or falling across half of the country, with sales “in limbo” until a Brexit deal emerges.
The debate among some estate agents is how to cut asking prices without precipitating a market crash. Richard Freshwater, of Cheffins in Cambridge, tells buyers that it is better to make a single, large cut in price rather than lots of small cuts.
“The key is to drop the price by enough to bring in a new set of buyers within a new bracket. The mistake often made by sellers is to reduce the price on consecutive occasions which can have a damaging effect and put buyers off.”
Separate research in October from the website Zoopla found that 38% of properties currently on the market have been marked down in price, with Brighton highest at nearly 47%. It said sellers in the seaside city are having to knock an average of £28,000 off the asking price to achieve a sale.
Sarah Coles, personal finance expert at Hargreaves Lansdown, said market power lies in the hands of buyers who are able to strike quick deals. “The property market hates uncertainty, so regardless of what happens next in Brexit terms, buyers may lose some of their enthusiasm, sellers may be reluctant to put their homes on the market, and we could see continued sluggishness in the market.
“It’s a buyers’ market, so you should be able to get the kind of discount that shields you from the risk of further drops in the market.”
With Brexit negotiations at maximum uncertainty, and concerns of a hard Brexit rising, the property is likely to remain moribund this side of Christmas. But Rightmove’s Shipside said the basics remain positive for price rises.
“With the supply of new-build houses remaining tight, a low interest-rate environment combined with near record employment, and average wage increases now rising faster than both CPI inflation and average property prices, the underlying fundamentals for a stable property market remain sound.”
Source: The Guardian