However, it said that the UK housing market is unlikely to face significant price falls or lower transaction levels in the face of further turmoil in the financial markets, with asking prices are already “bumping along the bottom”.
Rightmove said that the housing market has developed an “uneasy balance”, with the supply of new sellers – down 30% on 2007 levels – broadly matched by the number of serious buyers.
Its house price index showed that asking prices have dropped by just 4.1% since the beginning of the financial crisis. Rightmove said the market is likely to be held up by the fact base rate is unlikely to change until 2013, so limiting forced sales and holding down mortgage rates for those with large deposits.
Nevertheless, it warned that rising unemployment could significantly test lender forbearance, while sovereign debt concerns could also impact lenders’ appetite to lend.
Miles Shipside, director of Rightmove, said: “We’re in a ‘limbo-land’, where a restricted number of motivated sellers are trying to match themselves up with the similarly restricted number of financially capable buyers.
“In many parts of the country transaction levels are limited to the number of sellers who are willing to price aggressively below the competition and can afford to do deals.
“It seems that this stalemate can continue indefinitely, until it is broken either by an improvement in upside factors, such as a relaxation of mortgage finance, or by a further marked deterioration in employment and a corresponding increase in forced sales at bargain-basement prices.”
He added that the UK continues to have a lack of property supply and high demand for housing, saying: “These factors give our housing market more balance and stability, but perversely prevent a possibly quicker but more painful route to recovery via lower prices with higher transaction volumes.”
