Morning:
14°c
Asking prices fall £20,000 as house sellers cave in to the credit crunch
Mira Bar-Hillel, Property Correspondent18.08.08
House sellers in London are finally coming to terms with the credit crunch and have slashed the asking price of their homes by more than £20,000 in a single month.
A new survey shows the price for a London home dropped by more than five per cent between July and August - the equivalent of £21,096. It now stands at just under £379,162.
According to Rightmove, which compiled the figures, asking prices fell in every single borough. But areas where new Olympic-linked public transport projects are expected to improve access fared less badly than other parts of the capital.
The biggest percentage fall was in Wandsworth, where asking prices are down by 7.9 per cent. In Hackney they fell by just 0.6 per cent.
In cash terms, the biggest losers live in Kensington and Chelsea, where asking prices fell £88,384 in the last month. In Westminster the fall was £64,877.
At the other end of the spectrum, asking prices fell by a relatively modest £2,767 in Hackney, £7,653 in Bexley and £8,188 in Southwark.
A spokesman for Rightmove said: "Faced with the scarcity of mortgage availability and the increase in unsold property, summer sellers have recognised the need to price aggressively."
Year on year asking prices in London are now 3.8 per cent lower than they were a year ago - in line with the situation in the South East and the South West, where annual asking prices are down 3.7 per cent.
Miles Shipside, commercial director of Rightmove, said prices could begin to stabilise in the autumn.
"Sellers who choose to come to the market during the peak holiday season generally have a greater need to sell," he said. "As a result, properties coming onto the market in July were on average over £21,000 cheaper than last month.
"Every borough in London saw a month on month fall in asking prices in July, and in all but six boroughs asking prices are now lower than a year ago." Mr Shipside said areas following the route of the Olympic-linked East London line extension, which will open in 2010, were more resistant to the drop in prices.
"New sellers coming to the market are still seeking prices higher than a year ago in Tower Hamlets, Hackney, Islington and, to a lesser extent, Southwark," he said.
"This is because these boroughs will see the benefits of new transport links in the near future, without suffering from current disruptions due to building works."
Property prices in London began to fall in January after more than a decade of strong rises.
The Bank of England revealed last week that the number of new home loans agreed has fallen for 14 consecutive months and is now at the lowest level since records began in 1993.
Reader views (10)
Utter twaddle. London house to income ratios have always been way higher than the rest of the UK, perhaps double.
Interest rates are no longer 8-9% but more likely 5-6%. The current commodity bubble bursting will damo inflation significantly going forward. The real issue is the rapacious taxation through income taxes and Council tax imposed by Labor. Those hoping for a real killing when buying have really short memories. Some of us interest rates at 15% in 1989 and houses recovered really quickly after that.
Over priced tat in the suburbs might fall more but central London will start to recover late next year and firm more in 2010. No I am not an Estate Agent.
- James, New Malden, Surrey
I sold my property in UK last year at the peak of the market, transferred cash to the Caribbean at $2.07 to the pound. Just waiting for the pound to drop to $1.60, will then cash in twice when I return to the UK.
- Steve Brinkhurst, rodney bay, st lucia
"said prices could begin to stabilise in the autumn" Don't these so called experts realise that statements like this do harm to their credibility. It's getting to the stage of the little boy who cried wolf 3 times. Read this sort of junk several times from people like Miles and the CML and the words fade into the mists of vested interest fairytale land.
Asking prices aren't much use either. The vast majority of 'sellers' are still in denial. Looking at all the 'For Sale' signs round here, they have been up so long I'm thinking of slapping preservation orders on them. They're becoming land marks. People still believe their 100k house is still 'worth' 250k
- Np, Cornwall, UK (Until the food runs out)
By Summer 2009 these drops will be viewed as just the start of the housing crash. Anybody looking to buy in this climate should seriously reconsider! Even if you use a very high £45k as the average London wage, Rightmoves average London house price is still 8.5x earnings.... still got a long way to fall!
- Steve, Kingston - United Kingdom
Funny thing about estate agents is that they always claim now is the best time to buy, but when no buyers turn up they make an excuse and claim it is because of the Summer holidays, then it is the Autumn, then Christmas, then the Winter, then Easter and so on till another year passes with no houses selling, ludicrous asking prices continue and the economy slumping.
An Irish economist last week said that house prices would HALVE in price in the next few years and that the sensible thing for house-buyers to do now was to rent - that way you potentially save hundreds of thousands of pounds in the coming housing crash and also sleep better at night!
When are estate agents and house sellers going to learn that asking prices are fifty percent over-valued and that the days of easy mortgage lending by the banks have gone for good?
This housing crash is going to be remembered decades from now just in the same way we all remember the 1929 stock-market crash!
- Jan C, Guildford
There is a long way to go yet in the property crash to make houses affordable again. A house should not cost more than 3-4 times your salary to be affordable. All the Interest Only and other dodgy mortgages have created a bubble. Average London salaries are 43k so there is a much bigger correction due and coming - this is just the beginning.
- Krista, Geneva, Switzerland
Miles Shipside, commercial director of Rightmove, said prices could begin to stabilise in the autumn.
Which Autumn, Miles? I'd hazard a guess at Autumn 2010.
- Luke, Exeter
When will spokespeople and 'experts' like Mr Shipside realise that the collapse of the market is not because of mortgage restriction but solely due to HIGH HOUSE PRICES.
When prices return to around 3.5 x salary, borrowing with current mortgage criteria will be a relative breeze.
This well-overdue crash is also proving that London is in no way immune - in fact, it's probably going to suffer more because of all the speculative money that's flooded into the capital's property market. And Mr Shipside's claims that the 'Olympics effect' will somehow sustain certain parts of London are ludicrous. But then what do you expect from someone who is essentially an Estate Agent's agent? Some more balanced views would lend articles like this more credibility...
- Cp, London, UK
Asking prices fall £20k and the actual drop, if a sale is agreed, will be lower than that. I suggest a further £20k again, bringing it to £40k off a £400k property, if my experience is anything to go by.
- Pete, London
More power to the Credit Crunch, London is overpriced anyway, 2 bed flat in Neasden in 1990 £80 000 now £180 000 keep on dropping.
- Jack London, London
