House Prices Set to Fall as Austerity Measures Start to Bite

Jun 21, 2010, 02:00 ET from Rightmove Group Ltd

LONDON, June 21 /PRNewswire/ -- The Rightmove House Price Index, the UK's leading indicator of house prices, recorded that the average asking price for a property in the UK edged up by just 633 pounds sterling in June to 237,767 pounds sterling.

New sellers' asking prices give an early indicator of the mood and future direction of the housing market. While sellers have increased their price aspirations for six months in a row, the pace is now slackening with a rise of just 0.3% this month, compared to 2.6% and 0.7% in April and May. The new government's initiatives, including the suspension of Home Information Packs (HIPs), reductions in public spending and rumoured increases in Capital Gains Tax (CGT), are having an immediate effect on the housing market. We are now seeing more competition among sellers and a slowdown in the number of buyers as the market begins to turn.

Miles Shipside, commercial director of Rightmove, comments: "They say that troubles come in threes. The continuing mortgage famine has now been joined by a surge in sellers following the abolition of HIPs and investor reticence driven by rumours of CGT increases. Together, these factors are likely to put an end to this year's recovery in house prices. It is an unfortunate concatenation of events that disrupts what was sort of passing as normal service, where investor appetite provided an uneasy balance to the first-time-buyer-starved market. A surge of HIP-free properties has come to the market, and mortgage-reliant buyers and wary investors are failing to match the increased supply."

Having seen average asking prices rise for ten out of the last 14 months, and a 7.4% increase in the first six months of 2010, we forecast that new seller prices will fall during the second half of 2010 to give an overall price standstill for the year. This month Rightmove has recorded a 22% increase in the weekly run-rate of new sellers coming to market, up from 27,235 in May to 33,149. New listings are now up 56% nationally compared to June 2009, with property for sale in London seeing the most dramatic rise in fresh stock at 88%. We believe this surge will tail off to a degree, but higher seller numbers and increased competition are new factors that those who are serious about selling will have to consider when setting their prices.

For further statistics and to download the Rightmove June 2010 House Price Index please visit - http://www.rightmove.co.uk/news/house-price-indexor  search for local house prices at http://www.rightmove.co.uk/house-prices.html

Contact details: Tom McGuigan, Rightmove Press Office, press@rightmove.co.uk, +44-0207 087 0700

SOURCE Rightmove Group Ltd



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