Asking prices in the UK fell by 0.1% this month with sellers being over optimistic about what is achievable but they are still 1.4% above a year ago at an average of £309,191, the latest index shows.
The marginal drop is to be expected in the summer months and there was also a rise of 8.6% in the number of homes being marketed, according to the Rightmove asking prices report.
However, there is currently no rise in the number of people looking for a home to buy and sales agreed were virtually unchanged compared to July 2017.
A breakdown of the figures show that year on year asking price growth has been strongest in Scotland, up 8.5% to £158,864, followed by a rise of 5.6% to £227,804 in the West Midlands and a rise of 5.5% in Wales to £196,468.
Greater London is the only place to see prices fall year on year, down 1.7% to £628,458 and month on month asking prices were down 0.5%. On a monthly basis asking prices fell in a number of regions, down 1.1% in the East of England to £226,310, by 0.7% in the South West to £310,121, down 0.6% in Yorkshire and Humber to £191,619, down 0.5% in the North West to £195,532 and flat in the South East at £411,991.
Rightmove also reports that the amount of stock for sale per agent is at its highest since September 2015, meaning sellers in areas of oversupply need to compete harder on price, presentation and promotion of their property to attract buyers.
In addition, the proportion of sellers already on the market that are reducing their asking prices is the highest at this time of year since 2011, indicating initial over optimism on price
According to Miles Shipside, Rightmove director and housing market analyst, with sales agreed by estate agents virtually flat, in areas of oversupply sellers are going to have to work harder to attract a buyer.
‘While an increase in seller numbers is a welcome sign of more liquidity in a generally stock-starved market, it has unfortunately come at a quieter time of year. Prospective buyers will need tempting with a summer special price or a beautifully finished and presented must have home, and sellers whose homes tick these boxes then need an estate agent with good marketing skills to promote it effectively,’ he added.
The growth in new seller numbers and the flat level of sales agreed numbers have resulted in an increase in total stock per estate agency branch. Nationally the average is 52 properties per branch, the highest level since September 2015. This is another indicator of increased seller competition, with more sellers searching for a buyer and buyers having more property choice.
‘The number of sales being agreed by estate agents is consistent with the same month in 2017 and is holding up well considering the uncertain political background and stretched buyer affordability. In fact, there are signs that activity is improving as the year progresses with sales agreed year to date now down just 3.9%, compared to 5.4% that we reported back in May,’ Shipside pointed out.
‘Most regions in the middle and north of Britain have brisk market conditions where buyers eagerly soak up extra supply of suitable property coming to market, and where there is enough momentum to support an increase in prices. With less momentum further south, any increase in property coming to market often leads to more property choice and gives buyers more negotiating power,’ he explained.
‘Whilst stock levels are very limited in the brisker market locations, from a national average perspective as we enter the summer holiday period the total stock per estate agency branch is at the highest level for nearly three years,’ he added.
The research also shows that having a competitive and realistic asking price from the beginning helps to attract immediate buyer interest and increase the chance of an earlier sale. For those homes not selling, reducing the asking price of their property is a common tactic. There are a third of properties currently on the market that have been reduced at least once since they first came on to Rightmove, which is the highest at this time of year since 2011.
‘A reduction in asking price is often a sign of initial over pricing by estate agents and sellers, and whilst a price cut can boost buyer interest you have to overcome the negativity that arises when a property has not been snapped up quickly,’ Shipside said.
‘Our research shows a much increased chance of a quick sale if priced sensibly at the outset, and in contrast if over-priced initially it often means a price reduction to a lower level than if it had been more accurately priced from the beginning. It can also be a sign of a falling market, where the gap between asking prices and what buyers are now willing to pay has grown,’ he commented.
‘With more price reductions at this time of year than in any of the last six years, there is likely to be a combination of both initial over pricing and failure to react fast enough or reduce by enough when initial buyer interest fails to lead to a sale,’ he concluded.