UK Home Sellers Advised To Price Realistically

Source : The Business Times, March 25, 2008

They can avoid bigger drop if they offer more attractive price now

(LONDON) Britons selling their home should 'get smart' and price their property more realistically before they lose out when home values decline later this year, Rightmove plc said.

The average asking price climbed 0.8 per cent in March to £239,655 (S$660,298) and they rose 1.3 per cent in London, Britain's most-used property website said in a statement yesterday. It said the gap between what owners charge and buyers can afford is widening as consumers find it harder to get a mortgage.

Bank of England policy maker Kate Barker said on March 19 that buyers will struggle to afford homes even if property prices weaken this year. The bank hosted a meeting of banking executives the next day as officials tried to stem a financial crisis that has prompted lenders to scale back mortgage offers.

'Sellers should price below their competition to achieve more interest now and avoid a larger price drop later in the year,' said Miles Shipside, Rightmove's commercial director. 'If sellers were to price more realistically at the same time as lenders were able to normalise lending criteria, we could see a speedier harmonisation of seller expectations and buyer affordability.' While asking prices are less than 1 per cent below their record high of £241,642 reached in October last year, sales are being agreed to at around 10 per cent less than that, the report said. In London, average asking prices were 1.3 per cent lower than the record of £412,731 in November.

Rightmove also called for the government, the Bank of England and lenders to take 'urgent coordinated action to ease mortgage liquidity'. British banks have raised the cost of borrowing for homebuyers with the smallest deposits to a seven-year high, declining to pass on two Bank of England rate cuts to 5.25 per cent. The average rate offered by lenders on loans for 95 per cent of the price of a property, fixed for 24 months, rose to 6.55 per cent, central bank data showed this month.

The UK housing market slumped to the worst since the eve of the nation's last recession in 1990, a survey by the Royal Institution of Chartered Surveyors showed this month.

Mortgage approvals stayed close to the lowest in nine years in January, the Bank of England reported on Feb 29.

House prices rose 5 per cent on the year, compared with an annual 5.8 per cent in February, Rightmove said yesterday. -- Bloomberg