Home sellers lambasted for 'folly' as they raise asking prices

Tuesday 14th February 2012

Asking prices for homes in England and Wales have risen 0.5% since the start of the year, despite ‘poor market fundamentals’.

Asking prices are now up 1.6% on a year ago.

The property search engine Home, which takes its data from virtually every property portal and website in the UK and produces its monthly reports in conjunction with Calnea Analytics, the Land Registry’s official number cruncher, said that it was hard to justify such optimism ‘in these difficult economic times’.

It went on: “Over-pricing in the current economic climate is simply folly. False optimism usually leads to disappointed sellers, but worse still, it could lead to a home buyers’ strike and consequently rapidly falling prices.

“We’ve already seen such a scenario play out in 2008 when properties piled up on the market and asking prices fell by 6%.

“No one would wish to see a repeat of 2008, but with both asking prices and supply rising despite dwindling demand, this could be a recipe for another disastrous year for UK property.”

The site reported that new listings were 12% up on a year ago and that the Scottish housing market has been flooded with a 48% rise in new listings.

It warned: “In a thriving economy where mortgage credit is abundant, GDP rising above inflation and job prospects look good, such a rise in the number of properties entering the market would be a sign of good fortune.

“However, in the current context of unemployment figures at a 17-year high, a contraction of lending by banks, shrinking economic output and over-burdened consumers increasingly resorting to payday loans to make ends meet, the foundations of a healthy housing market are deteriorating.”

In a separate report, in Scotland, latest figures show that sellers dropped their prices by 3.3% in the last quarter of last year – but purchasers still offered well under the asking price.

The average home sold for around £9,000 less than the asking price, according to the Scottish House Price Report.