Property asking prices up despite market

Property asking prices jumped by more than 3% during October as sellers refused to adjust to the new market conditions, research indicated today.

The average person putting their home up for sale in England and Wales hiked their asking price by 3.1%, or just over £7,000, to £236,849, according to property website Rightmove.

The increase follows three consecutive months of falling prices and comes despite the fact that the number of homes estate agents had on their books remained close to record levels.

Rightmove said "bullish pricing" was a normal characteristic of the autumn market, with asking prices increasing during every October for the past decade.

But it warned that many sellers were likely to be disappointed, as evidence suggested that launching a property at a high price often damaged the chances of selling it later on at a reduced one.

The optimism among sellers comes despite the fact that many house price indexes have reported price falls in recent weeks.

Most commentators also expect house prices to fall modestly during the coming year, with some predicting double-digit dips.

Recent falls in the cost of property have been caused by a rise in the number of homes coming onto the market, with Rightmove saying estate agents now had an average of 78 properties on their books, with around 11% more properties being put up for sale each week, compared with the same period of 2009.

But estate agents are also reporting that buyer activity has failed to pick up significantly following the summer break, meaning it is still a buyers' market.

Miles Shipside, director of Rightmove, said: "Given the challenges of the current market, the behaviour of sellers in raising their average asking prices by over £7,000 takes some explaining.

"Every year, vendors coming to market after the summer holidays hope to take advantage of any positive price impetus from buyers who are keen to be in a new home before Christmas.

"It's not likely to be a successful tactic, though it is a sign that many sellers are not experiencing high levels of financial stress but can't afford to accept a lower price if they are to make their sums stack up for the next move."

He added that now home information packs had been abolished, homeowners could also test the water at minimal cost.

All areas of the country saw a jump in asking prices during the four weeks to October 9, apart from the North West, where they fell by 2.3%, and Wales, where they dipped by 0.6%.

London led the way, with new sellers raising their prices by 5%, followed by the East Midlands, where they hiked them by 4.3%.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "There can be little doubt that many sellers are 'trying it on' and deliberately asking inflated prices, knowing that they will be knocked down by potential buyers who have the upper hand given the current weak state of the housing market.

"These sellers are likely hoping that they will get a price nearer to what they really want if they ask an inflated price to begin with.

"The danger with this, of course, is that they risk getting little, if any, interest from buyers in their houses."

He added that the jump in asking prices did not alter his view that the cost of property would fall by around 10% during the final part of this year and 2011.