March 24, 2008 / 8:02 AM / 11 years ago

Property sellers need "reality check"

LONDON (Reuters) - Sellers need a “reality check” when pricing their homes for sale, as unsold stock reaches record proportions, Britain’s largest property portal Rightmove.co.uk said on Monday.

Sellers need a "reality check" when pricing their homes for sale, as unsold stock reaches record proportions, Britain's largest property portal Rightmove.co.uk said on Monday. REUTERS/Darren Staples

The Web site — which advertises 90 percent of all homes for sale via estate agents across the UK, measuring an average 35,000 properties coming to the market per week — said Britain’s property market was in danger of stagnating, as house price growth nears zero percent.

The average asking price in March rose just 0.8 percent to 239,655 pounds on the previous month, down from 3.2 percent in February, its index shows. That took annual house price growth to 5 percent from 5.8 percent.

Buyers’ choice continued to grow as unsold stock reached a peak for this time of year: an average of 67 homes remained unsold per estate agent branch, up from 56 a year ago and 64 last month.

Rightmove said “smart pricing” was needed to take account of growing competition, an average 10 percent drop in selling prices from the peak of the housing market boom and buyers’ affordability constraints.

Commercial director Miles Shipside said: “Most sellers coming to the market seem to be ignoring the increased competition from other unsold properties and the challenge buyers now face in obtaining a mortgage.

“As many of these sellers are likely to be buyers themselves, they seem to be trying to bank a higher figure for their home but want a bargain when they buy.

“The best price sellers can achieve has fallen — though they won’t lose out if they are then planning on buying as well.”

Mortgage lenders have tightened their lending criteria, as the fall-out from the credit crunch continues, and Rightmove warned that some properties could become unsaleable if sellers do not drop asking prices and the government does not act to strengthen funding markets.

“If sellers were to price more realistically at the same time as lenders were able to normalise lending criteria, we could see a speedier harmonisation of seller expectations and buyer affordability,” said Shipside.

“Until then, there will be a lot of sellers who can’t sell and a lot of buyers who can’t buy, and everyone sitting on their hands.”

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