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Buyers locked out of paralysed property market

Interesting article we came across from Rightmove

Stubborn sellers refusing to drop prices and rigid mortgage lenders with a stranglehold on funds for buyers are paralysing the housing market, according top property portal Rightmove.

The online property listing site claims property asking prices are rising with owners demanding a 3% increase from buyers in January over average prices in December.

According to Rightmove, the average property asking price is now £230,000 – £65,000 above the Land Registry’s price of £165,000 for an average home in England or Wales.

The comparison is not like-for-like as Rightmove’s average is for asking prices while the Land Registry figures are based on actual sale prices paid by buyers.

“Sellers are unwilling or unable to drop their asking prices to bargain basement levels – this helps explain why new sellers’ average asking prices remain broadly static year-on-year,” said Rightmove’s Miles Shipside.

“New sellers see comparable properties to theirs on the market so they and their agents try a similar asking price.

“Without a really pressing need to sell you can see why price re-adjustments seem painfully slow in many local markets and they will not fall by enough to really assist the return of mass market affordability.”

Rightmove reckons many would-be buyers and movers locked out of the market.

The main reasons are first time buyers cannot raise large cash deposits or mortgages, while movers do not have enough equity to finance a move because of falling prices squeezing loans secured on their homes.

“Mr Average will be left out in the cold in the buying and selling game,” said Mr Shipside.

“The mass market is unlikely to recover to former volumes without the return of healthier access to credit, so continuing falls in the percentage of owner-occupiers and a consequent growth of the rented sector is the realistic prospect.”

Rightmove estimate 530,000 mortgages were agreed by lenders in 2010, while 1.3 million properties came to the market.

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