Whatever sellers wish to believe about the value of their property, here’s a reality shot ahead of a bleak housing midwinter courtesy of Rightmove’s latest house price index (click to enlarge):
Last month the Rightmove house price index reported that prices were up — yes, up – by 3.1 per cent. However for the period to early November it is a different story, with the property site registering a month-on-month decline of 3.2 per cent, based on the properties advertised on its website, which makes it the largest monthly decline since December 2007. As Miles Shipside, director of Rightmove, observes, the Christmas slowdown may have arrived early this year.
Howard Archer of IHS Global insight further adds (emphasis theirs):
This was a dose of reality from sellers as it more than wiped out the incredibly optimistic looking 3.1% rise in asking prices in the month to mid-October. In fact, with the exception of October’s spike up, asking prices for houses have fallen each month since July.
All of which illustrates the flip side to the psychological leap performed by sellers as described last month in the FT perfectly (emphasis ours):
Sometimes it can take a grandparent to point out the rules to a child kicking their heels in frustration over the lack of an increase in pocket money. “I want” does not mean “I get”.
Such moral authority is rarely recognised in estate agents, whose tendency to make a molehill (two bed, kitchen-diner) into a mountain (des res, period, viewing recommended) is surely in part responsible for findings by Rightmove that asking prices for houses have been raised 3.1 per cent in the past month. Sellers in London saw fit to raise prices by an even more bullish 5 per cent.
This can also be explained by a seasonal effect – autumn often starts with optimism in homeowners thinking their new carpets and freshly turfed lawn warrant a higher price than the place that has failed to sell down the road. But it also shows a telling psychological leap that can happen before a dip in house prices. Sellers know they will have to cut prices but believe by starting high they will settle near their target.
Sadly the other traditional sign of the autumn market – the emergence of new buyers – has been as late this year as the conkers, undermining the likelihood such tactics will succeed.
That said, Rightmove is striving to be optimistic by suggesting that people may be holding out for a property bargain still to come over the winter. But they still note that such buyers “appear to have gone missing from estate agents’ books.”
And for Rightmove the data do not carry promises of pressure on prices being eased as lower buyer numbers are matched by fewer properties coming onto the market. They say that the latest 9.1 per cent drop in the number of sellers still outpaces mortgage approvals by 2 to 1.
It’s time to be realistic in our house price aspirations – FT
Taking the temperature on housing – FT Alphaville