Having previously tried to resist market forces, property sellers have begun aggressively to cut the asking prices for their homes, according to the online estate agency Rightmove.
After months where asking prices moved down by much less than the actual prices agreed on property deals, householders slashed the asking price of the average British home by 2.3 per cent last month – a drop of £5,403. In London, the discounting has become even more marked, with asking prices down by 5.3 per cent last month alone, representing a reduction of £21,000 in the four weeks to 9 August, said Rightmove in its latest survey of the housing market.
The 2.3 per cent fall in asking prices represents a significant quickening of pace on the 1.8 per cent and 1.2 per cent drops in the preceding months, and is the largest fall Rightmove has ever measured in August.
Miles Shipside, commercial director of Rightmove, said: "Sellers coming to the market in the middle of the summer holiday season tend to be more motivated. London, in particular, appears to be having its own special summer sale." Prices in the capital are 3.8 per cent lower than last year, compared with 4.8 per cent nationally.
Rightmove said that national asking prices reached a peak for the year at £242,500 in May, compared to selling prices, as measured by the Halifax and Nationwide indices, which peaked last autumn. The catch-up is attributed to "some discretionary sellers choosing not to enter the market, leaving a higher proportion of forced sellers who price more aggressively", said Rightmove.
Such anecdotal evidence is supported by the most recent survey of the housing market by the Royal Institution of Chartered Surveyors, which also detected an increasing number of distressed sales, especially in the south and East Anglia. The number of new mortgage approvals, says the Bank of England, is down 70 per cent on last year.
The latest survey also confirms that business is extremely slow for estate agents. Rightmove says that the average unsold stock of property per estate agency branch has increased again to new record levels: in spite of the low supply of new instructions, it now stands at 78, up from 77 last month: Mr Shipside said this indicates that the number of transactions will continue to be at historical lows.
"The number of transactions this year is in danger of being the lowest since 1959. This raises serious questions as to whether any short-term incentives by the Government or the Bank of England would be effective in speeding up the market recovery against the backdrop of the global problems of the credit crunch."
Meanwhile, a separate survey published today found that more than £18bn of equity tied up in buy-to-let properties will be cashed in over the next few years, as Britain's private landlords sell out of the sector in their droves.
The insurance giant Skandia said the total buy-to-let mortgage stock will reduce to just £44bn within the next few years, as thousands of landlords sell up and pay off their loans. Last year, buy-to-let mortgage balances topped £120bn – a rise of more than 20 per cent on the previous year and some 60 times greater than the £2bn which was outstanding a decade ago. By the end of 2007, private landlords represented one in 10 of all UK mortgages, up from well under 1 per cent back in 1998.
Nick Poyntz-Wright, chief executive of Skandia UK, said: "Higher mortgage rates and falling property prices will cause investors to reconsider their exposure to residential property, and many will choose a more diversified approach."