Report Warns of Price Falls

Homeowners are deciding to sell their properties in a much larger numbe rthan originaly anticpated, which which may start a sharp fall in house prices a report warned this week.

For the first time this year, asking prices have reduced and are predicted to fall even lower by the end of the 2010.

The report, by property website Rightmove, predicted the drop will knock another £14,000 from average selling prices by December.

It has been widely reported that asking prices dropped by 0.6 per cent this month, with the typical vendor reducing by £1,435; this is the first drop since the end of 2009.

The report believes the price fall is due to an increase of homeowners deciding to sell.  In excess of 30,000 homes are on the market each week  -  this is almost 50 per cent higher than in July 2009. For example, in London, the number of new sellers is some 7 per cent higher than July 2009.

This is fine but there are supply and demand issues; there are too few buyers, according to Rightmove.  The result is that the market will be controlled by buyers who will look for discounts from owners.

Rightmove, with about 90 per cent of all properties advertised for sale, said mortgages are being 'rationed', which is having a staggering effect on buyers; there are only 11,000 mortgages being approved, a third of all properties coming onto the market.  Miles Shipside, commercial director of Rightmove, said: ' Buyers have got the upper hand.'