Vendors told to get real as asking prices bounce up 3%

Asking prices for properties new to the market have bounced up 3.1% within the last month, Rightmove reported this morning.

The hike means that the average house price is now £230,000.

But many of these and other properties listed on Rightmove are unlikely to sell in a hurry – at any price.

Rightmove said that last year it marketed 1.3m properties – against only 530,000 mortgages granted. It said that 2011 is set to be same and that there would be more people seeking ‘desperate housing solutions’, including limbo-landlords.

The site also warned that low transaction levels will be the norm for the foreseeable future, and that it was the middle tier of the market that is worst hit.

It added that a few ‘elite’ markets are moving, with new seller numbers up by 21% in London compared with this time a year ago. In London, a 4.2% jump in asking prices raises the average asking price to £413,259.

Director Miles Shipside said the traditional mass market was paralysed by lack of mortgage finance and insufficient equity to trade up.

He said that the ‘clear imbalance’ between the number of properties on the market and the number of mortgages lenders were willing to hand out showed no sign of resolution.

He said: “Any hopes that transaction volumes may be on the springboard preparing to return to historic norms will have been dashed by lenders’ predictions that 2011 lending volumes will match 2010’s dire levels. ‘Mr Average’ will be left out in the cold in the buying and selling game.”

Shipside added: “The mass market is unlikely to recover to former volumes without the return of healthier access to credit, so continuing falls in the percentage of owner-occupiers and a consequent growth of the rented sector is the realistic prospect.”

The jump in asking price widens the already yawning gap between what house sellers want and what they end up getting.

Nationwide is currently quoting £161,602 and Halifax £164,713 as national average selling prices.

Nick Hopkinson, director of PPR Estates, which buys up distressed properties, said: “With house sales volumes remaining on the floor, even estate agents acknowledge that current asking prices are more a reflection of home seller fantasy than what anyone else will really pay in 2011 for property across most of the UK.
 
“Only super-premium London properties are achieving anything like asking prices due to a very limited availability of multi-million pound property being sought by cash-rich foreign buyers. This does not apply anywhere else.  

“All the house price indices, therefore, need to be read with a high degree of caution at the moment as they are very likely to give a falsely optimistic reading of the market as transaction levels are so low.

“Many potential sellers may well look back and wish they’d accepted a more realistic sale price last year once interest rate rises inevitably start to kick in later this year.”