New sellers during July are putting their properties onto the market in at prices 2.3% (£5,403) lower than in June as they continue to fight the slowdown in the housing market.

The new figures from Rightmove.co.uk report the biggest regional reversal was in London, where summer sellers have reduced asking prices by 5.3% compared to the increase of 0.3% of the previous month.

In spite of London’s large monthly fall, it is still playing catch-up with the rest of the country. Prices in the capital are 3.8% lower than last year, compared with 4.8% lower nationally. National asking prices reached a peak for the year at £242,500 in May and have now fallen by £12,684 (5.3%) to £229,816.

This rapid re-adjustment during the last three months comes as some discretionary sellers choose not to enter the market, leaving a higher proportion of forced sellers who price more aggressively. The number of new listings measured this month stands at 106,000, which is almost 25% down on what we would expect to see at this time of year.

Miles Shipside, commercial director of Rightmove comments: “Sellers coming to the market in the middle of the summer holiday season tend to be more motivated. London, in particular, appears to be having its own special summer sale with over £21,000 off in a month.

Whilst those who do not have to sell are holding off, sellers who are also looking to buy are strongly placed to negotiate an equal or larger reduction in the price of the property they are buying. In addition, buyers currently benefit from the best choice in years. For example, properties that are architecturally desirable or in tight school catchment areas are increasingly attainable. Buyers with specific requirements should take a long-term view to try and secure their dream home.”

Main Points
- Average Property Asking Price (August) : £229,816
- London worst hit as new sellers knock off £21,000 in a month
- Monthly falls accelerate as summer sellers drop average national prices by 2.3% (£5,403)
- Number of new sellers hits historical August low, though buyers still have widest choice for years as unsold stock levels rise to record levels
- Danger of short-term incentives to boost the market doing more harm than good

Unsold Property rises
Rightmove also reported the average unsold stock of property per estate agency branch has increased again to new record levels. In spite of the low supply of new instructions, it now stands at 78, up from 77 last month. This indicates that the number of transactions that the Land Registry will eventually report for the rest of 2008 will continue to be at historical lows. A combination of low new supply and a normal level of sales would normally lead to a substantial fall in the number of unsold properties. Instead, Rightmove is seeing the seventh consecutive monthly rise as buyers remain scarce.

Stamp Duty holiday issues
Meanwhile, the rumours of a stamp duty holiday came under scrutiny by Rightmove, who said that a short-term stamp duty holiday has its dangers as it does not address the lack of wholesale mortgage funding. If implemented without due care and attention, Rightmove say such moves have resulted in a mini transaction spike followed by a stagnation trough, as was the case 1991-1992. “Clarity as to whether a stamp duty holiday is in the offing is urgently required as hard won sales are falling through. Any initiative must be accompanied by a clear strategy as to how to bring the holiday to an end without causing excessive market disruption. Falling commodity prices may give future scope for the Bank of England to boost the market by cutting interest rates, despite inflation running at more than twice the Government target. However, with wholesale mortgage markets remaining closed, they
cannot meet the current subdued demand for mortgages, let alone any upsurge. Initiatives that increase demand for mortgages could therefore force lenders to raise mortgage rates again, stifling any benefits. Extending the special liquidity scheme to help the market find a proper footing appears to
be a key foundation to find a workable solution.”