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'False optimism’ pushes up property asking prices
16 February 2009 @ 23:42

Almost as if to prove Disraeli’s dictum that there are “lies, damned lies and statistics”, asking prices for homes on sale in Britain are said to have risen by 1.2 per cent last month, a figure that you might think shows the property market bouncing back at last. In which case, you should think again.

According to Rightmove, the property website, which revealed the increase, it is down not to a much-wanted revival but to a burst of “false optimism” among those marketing their properties and a chronic shortage of new homes coming on to the market.

In the past four weeks 45 per cent fewer properties were put up for sale than in the same period last year – 75,140 new homes, compared with 137,442, Rightmove found. The website said that this lack of competition had prompted sellers and agents to become more bullish by raising asking prices, despite predictions that house prices have a further 10 per cent to fall.

Asking prices recorded by Rightmove increased from £213,570 in January to £216,163 this month, compared with an average sales price of £184,333, according to the Centre for Economics and Business Research. Asking prices in London rose by 0.3 per cent, from £386,653 to £387,988. Rightmove said that national asking prices were down by 9.1 per cent on average over the year – the biggest annual fall it has ever recorded – but noted that properties are selling once 25 per cent has been knocked off the peak price.


Miles Shipside, director of Rightmove, said: “A lack of fresh stock leads some agents to suggest a more optimistic initial asking price, influencing a seller to give the most bullish estate agent the instruction to sell. This is a traditional tactic employed at the start of every year to attract fresh stock, but is a shortsighted move for both parties in a falling market.”

House prices have fallen by an estimated 17.2 per cent over the past year, according to Halifax, making property more affordable for those with enough cash. Figures from Hometrack, the property market research group, suggest that these house price falls have made it easier for some homeowners to trade up to a bigger property. For example, the gap between the average cost of a three-bedroom semidetached home and a four-bedroom detached property has narrowed by 10 per cent, Hometrack said. However, estate agents have reported that many keen buyers are not able to take advantage of lower prices because of a lack of mortgage finance.

Mr Shipside said that supply constraints were expected to ease as more and more “distressed” sales go to auction. Auction rooms are expecting an influx of new properties as the number of repossessions rises and lenders try to sell the homes on. Figures from Eigroup, the property auction company, showed a 22 per cent rise in the number of lots coming to auction in the past 12 months. The Council of Mortgage Lenders said that repossessions were expected to rise from about 45,000 last year to 75,000 in 2009.

Mr Shipside said: “Repossessions are still concentrated in relatively few areas of the country, though record numbers are rumoured to be in the pipeline, with some auction houses scheduling several ‘pile them high’ auctions.”

One focus for bargain-hunters today will be Savills residential auction. Lots include a seven-bedroom detached house in one of the best parts of Putney, southwest London. The property, which requires “complete upgrading”, was for sale at £2 million a year ago, but the auction guide price is £850,000.

Also being offered is Sleddale Hall, a remote farmhouse near Penrith in Cumbria, which became famous as Crow Cragg, the house of the lecherous Uncle Monty in Withnail and I, the 1987 cult movie. The guide price is £145,000. Kate Moss and Sir Philip Green are said to be interested in turning this rundown rural spread into an artists’ colony. However, fans of the film want to bid and have been trying to scrape together the cash through their website at saveunclemontys.org.



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