UK property asking prices have recorded their biggest monthly drop in nearly three years as desperate sellers try to get the market moving ahead of the Christmas slowdown.
According to the Rightmove House Price Index, new sellers cut their asking prices by 3.2% in November – the largest decline seen since December 2007. The index said there was now an "unseasonably high number" of unsold properties on the market amid a dearth of first-time buyers and buy-to-let investors.
Rightmove director Miles Shipside said estate agents were saying the Christmas slowdown had "come early". "Both would-be buyers and sellers are adopting a 'wait and see' policy until the direction of next year's housing market becomes apparent," he said.
In spite of the downward trend, this month's new sellers are still asking 1.3% more than in November 2009. But prices have fallen in four of the last five months and Rightmove thinks the market will see "zero" growth this year. Rightmove said 24,028 sellers per week were entering the market, but that was 9.1% fewer than in October, and sellers still outnumbered mortgage approvals by two to one.
Last month analysts made fresh predictions for house price falls in the coming months after mortgage lending slumped to its lowest level in a decade in September. The monthly data from the Council of Mortgage lenders failed to show the usual autumn pick up with gross lending of £12bn, down from £12.1bn in August and 7% lower than September 2009. The last time lending was lower was in September 2000, when just £10bn was advanced.The strength of last year's rebound – after steep falls in 2008 – surprised commentators, but Shipside said the "price bounce" had run out of steam in all but the most popular and affluent locations and that trend was now filtering through to the annual figures. "The price growth through the first half of the year has been reversed by price falls in the second half of the year," he said. "First-time buyers and buy-to-let investors both appear to have gone missing from estate agents' books."
Rightmove said the London housing market continued to buck the national trend with asking prices cut by just 0.4% in November. They remain 3.5% higher than a year ago, compared with the national average of 1.3%. "London's limited property supply and domestic as well as international demand are helping to insulate its property prices from some of the downward pressures being experienced elsewhere in the country," said Shipside. However, cracks are beginning to show, with the number of new sellers also falling away, with 16,810 properties recorded in the November index – down 9.1% in last month.