Sell now or face spring house price stagnation, says Rightmove

Homeowners wishing to sell need to either cut prices now, or face a spring of stagnating house prices, property website Rightmove has said.

12:53 20 December 2004

Homeowners wishing to sell need to either cut prices now, or face a spring of stagnating house prices, property website Rightmove has said.

The website has recorded a modest fall of 0.3 per cent in asking prices in December, but said that this is not enough to tempt buyers back to the market.

Rightmove says the increase in property prices in the first half of 2004 and increased interest rates made borrowing more expensive resulting falling home sales and properties spending longer on the market.

"Homeowners who want to sell need to be much more realistic with their asking prices if they want to persuade buyers back into the market," said Miles Shipside, commercial director at Rightmove.

"Even once the quieter holiday period is over, sellers will find themselves competing with a lot of other properties on the market. In any business, excess supply and low demand means one thing 'cut prices'," he added.

Mr Shipside pointed out that prices are still higher than they were as recently as May. Consumers were forgetting the recent large rises in property values and were holding on for a few extra per cent, which could lead to months of stagnation in house prices, he added.

"What needs to happen is for sellers to be much more realistic about the value of their homes, and to remember just how much they made in capital appreciation in the first half of 2004, not to mention over the last few years," said Mr Shipside.

"In addition, the majority of homeowners who are moving up the housing ladder will more than make up what they lose on selling their own house by getting a very good deal on the property they buy," he added.

"If sellers take the bull by the horns and adopt a ruthlessly realistic approach, this could act as the short, sharp shock we need to bring life back into the market.

"In this scenario, there would be falls in the first half of 2005 but then gradual monthly growth in the second half. The latter part of the year would see a recovery of some of the earlier falls and, most importantly, a much greater degree of positive sentiment in the market.

"The alternative is rather less palatable; if house prices remain stubbornly higher than buyers are willing to pay and there is no timely cut in interest rates, this could lead to a longer-term stalemate. Not an attractive proposition, and it could lead to house prices falling throughout the year as stagnation sets in and buyer confidence refuses to return.

"In simple terms, it could be a choice between a 'winter sale' or a spring stagnation."