This is the biggest fall in asking prices this year, according to Rightmove, and follows the drop of 0.6% in July.
Miles Shipside, director of Rightmove said: “No one really wants to come to market in August unless they have to. It shows these new sellers have a compelling need to sell, as they have lopped over £4,000 off the average asking price.”
Keen sellers are negotiating to beat the competition, said Shipside, added to the fact August and December traditionally see price falls.
“Following gains of 7.0% from January to June, prices have now fallen back by 2.3% in the last two months. We predict that the gains made so far this year will have dissipated by year end,” he said.
Shipside said he wouldn’t discount further price rises in September and October when buyers return to the market, but said the year could perform similarly to 2008, when prices fell by 7.8% in the second half of the year.
Shipside added: “There needs to be a spur to cause prices to rise. However, as mortgages won’t become available to the masses and last year’s stock shortages show no sign of re-appearing, we can’t see it happening during the remainder of 2010.”
In this market, the only options left to sellers are to spruce up the property or cut prices, said Shipside.
Mortgage approvals are up by 13.8% on the previous month, but down 3.6% on the same period in 2009. The mortgage shortage continues to hold back the market, said Rightmove. It continues to frustrate pent up buyer demand, flagged up by the all-time high of hits on Rightmove’s website achieved on 10 August, with 25,413,442 page views.
Rightmove’s last quarterly Consumer Confidence Survey, showed six out of ten renters would like to buy but can’t afford it. The number of distressed sellers is likely to increase in the coming months putting property prices within reach of new buyers, but small deposits will bar many from their first homes.
Shipside said the next twelve to eighteen months could offer opportunities for those with a deposit and a good credit record, as low rates and lower property prices align to create better conditions for new buyers.
If salaries rise in line with inflation, the conditions could produce a solid foundation for the property price pendulum to swing back up, fuelled by growing household numbers, lack of new build and easing in mortgage availability.
But he cautioned: “As always, deposit-rich buyers will remain in the driving seat,
and rising interest rates will keep the less creditworthy buyers from returning to the market. If you can’t raise a beefy deposit, cheaper property prices won’t help you much”.
