Business

UK housing market faces paralysis, warns Rightmove

Looking in an estate agent's window
Image caption A recovery in sales is a long way off, Rightmove says

Most of the UK property market faces "paralysis" this year, says the estate agency website Rightmove.

The company claims to advertise 90% of all properties for sale on behalf of local estate agents.

It says many sellers are refusing to drop their prices, with the price of newly-advertised properties in fact rising by 3% in January to £230,000.

That was £65,000 above the average selling price of £165,000, according to the England and Wales Land Registry.

Rightmove said the seizing up of the market was mainly due to a lack of mortgage finance for would-be buyers, and the erosion of equity in their homes due to falling prices.

But Miles Shipside, Rightmove spokesman, said another factor was the reluctance of sellers to drop their prices, despite the lack of demand for their homes.

"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," Mr Shipside said.

"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," he added.

'Locked out'

Property market commentator and estate agent Henry Pryor argued that sellers were deluding themselves.

"Sellers seem to completely have misread the market and increased asking prices at a time when sale prices are actually falling," he said.

"Just 43% of sellers found a buyer last year and it looks like 2011 will be even tougher.

"We started this year with nearly 1 million homes on the market and with even more piling on, the chances of your home selling in the next 12 months looks like it has fallen below 40%," Mr Pryor added.

Rightmove predicts that 2011 will see many buyers continue to be locked out of the market.

"Mr Average will be left out in the cold in the buying and selling game unless the beneficiary of a hereditary hand-out," 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," he added.

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