Rightmove June -0.4%

[Sybil13]

Was this rightmove report released today?

Um yes.

[Harry Monk]

Well Sybil, bearing in mind that even the worst fall from peak by Halifax is only 20%,

So you accept that house prices have fallen by 20% since 2007?

That's good Rinoa, you have moved above Sibley in my estimation. Not that that's anything to write home about.

[bobthe~]

Yes, fascinating concept.

You could get cognitive dissonance thinking about it.

The equity exists in the minds of sellers, as they think they should receive more than they paid.

This could of course work if everyone who currently owned a house conspired to play a housing based form of pass the parcel. I'll buy your overly inflated house, provided someone agrees to buy my overly inflated house and they in turn have received an overly inflated price for their house. It might even work if it was perfect circle and all the group did was simply swap homes. They could pretend they were worth whatever they liked.

Of course in reality it isn't a perfect circle, and the FTBer needs real money. The FTB now isn't playing ball an so the above imagined equity has vanished in a puff.

I seem to recall someone suggesting that perfect circle on this site as a means of keeping the HPI party going. Seems like not enough people wanted to do that. There are only so many shitboxes that dead people want apparently.

It is worth also pointing out that as we all know the prevailing wisdom in the EA world is that houses are difficult to value when you are trying to get an instruction and so you find out what another agent has valued it at, and stick it on for 10k more than even their fanciful price.

Then when you get no viewings because it is overpriced, you chip away at the vendors by saying that if it was perhaps 20k cheaper, there would be some people interested.

RM figures only show the initial listing price and ignore any further drops in price.

about 6-9 months ago, anecdotally, some people we knew were told by the EA not to drop their price because there were no buyers whatsoever. Of course that was cutting off their nose to spite their face, because as we have seen, when the price drops 20% from the peak, there is price support because the cash buyers re-enter (for a while).

[house123]

Um yes.

Sorry.. Am I the only one who thinks releasing this on a Saturday is odd? I seem to remember that all their recent positive data was always carefully positioned during the week for maximum effect.

[Harry Monk]

Sorry.. Am I the only one who thinks releasing this on a Saturday is odd? I seem to remember that all their recent positive data was always carefully positioned during the week for maximum effect.

I believe it was due for release tomorrow- a Sunday, which is even more bizarre- but was leaked early.

Don't shoot me if I'm wrong, I read it on here.

[house123]

I believe it was due for release tomorrow- a Sunday, which is even more bizarre- but was leaked early.

Don't shoot me if I'm wrong, I read it on here.

I am not down with all the complicated whys and where for’s about whether or not the house price crash has reached the bottom or not. However, sometimes the answer can be staring right at you.

[Sybil13]

I know I have asked this before but feel a need to ask it again as whatever explanations I have had just don't add up.

I know I am ALWAYS told that you cannot use stats from different sources.

I have said previously however, that as RM report ASKING prices and Nationwide / Halifax report selling price (prior to valuation), then it seems relevant surely to say as they did in the article related to RM's June figures:

The most startling omission from the RM report and commentary is the lack of explanation for the disparity between the average asking price of £226K and the recorded average selling price of circa £160K. This suggests, with some certainty, that delusional vendors are still asking for prices 40% above the true market valuation. Until this bizarre artificial gap 'crunches' the housing market will continue to stagante and deteriorate.

I posted a thread a few weeks ago about:

1. lenders valuing at the 30 - 40% from peak and chains breaking.

2. RM saying in January that sellers needed to reduce prices 25 % +

3. Hometrack saying that a survey of EA's confirmed property is selling at 30% off peak

4. RICS in March saying that they thought there had been 30% falls already and Nationwide and Halifax figures were incrorrect.

etc etc..

I said in that thread that I believed that if RM & Savills etc were saying in Jan 2009 sellers needed to reduce by 25 - 30% it would be 35 - 40% by Jan 2010.

Yet here we have figures that appear to confirm property is already selling 40% below asking so why isn't that showing in the stats?

I asked previously, the one house per agent per month that is selling is that selling to someone mad enough to pay peak prices? It can't be can it if the selling price (pre valuation) is showing at 40% below RM's asking ......

So it must be sold by the one seller willing to reduce 40% , so why isn't that showing up in the stats?

Not clever enough to figure this for myself. Is it because there are a lot of cash purchasers?

I know lending levels are down 60% whilst approvals are about on a par to last year which must mean something, but what? That the same number of people are buying for a lot less than last year?

Come on someone help me here. I started another thread this week about what would stop the stand off between sellers and buyers, there were several articles this week about buyers wanting 30% + off peak and sellers being unrealistic.

If property is selling 40% off asking .

If chains are breaking as surveyors put in realistic valuations.

If lenders are valuing 30 -40% off peak. (Confirmed in various articles )

Then why are we not seeing this in the stats?

It is clear that there is a LOT of property just sitting there doing nothing with the sellers waiting for a 2007 offer, but for how much longer can it just sit there, when July is the busiest month for moving which means the offer would have gone in in April / May. I think we have already passed the peak for the current bull trap, the RM report said it was the end of the dead cat bounce, but how long is it going to take before sellers / EA's / bulls / etc catch up to the idea that property has fallen 30 -40% in as much as the vast majority of buyers are not happy to pay more than that for the properties currently on the market, and lenders are not happy to give more than that to anyone getting a mortgage.

[Moo]

Usually you lot say Rightmove are pants. Is that still the case?

Yes. It's asking prices. It's near as damnit random.

[Emy74]

I know I have asked this before but feel a need to ask it again as whatever explanations I have had just don't add up.

I know I am ALWAYS told that you cannot use stats from different sources.

I have said previously however, that as RM report ASKING prices and Nationwide / Halifax report selling price (prior to valuation), then it seems relevant surely to say as they did in the article related to RM's June figures:

I posted a thread a few weeks ago about:

1. lenders valuing at the 30 - 40% from peak and chains breaking.

2. RM saying in January that sellers needed to reduce prices 25 % +

3. Hometrack saying that a survey of EA's confirmed property is selling at 30% off peak

4. RICS in March saying that they thought there had been 30% falls already and Nationwide and Halifax figures were incrorrect.

etc etc..

I said in that thread that I believed that if RM & Savills etc were saying in Jan 2009 sellers needed to reduce by 25 - 30% it would be 35 - 40% by Jan 2010.

Yet here we have figures that appear to confirm property is already selling 40% below asking so why isn't that showing in the stats?

I asked previously, the one house per agent per month that is selling is that selling to someone mad enough to pay peak prices? It can't be can it if the selling price (pre valuation) is showing at 40% below RM's asking ......

So it must be sold by the one seller willing to reduce 40% , so why isn't that showing up in the stats?

Not clever enough to figure this for myself. Is it because there are a lot of cash purchasers?

I know lending levels are down 60% whilst approvals are about on a par to last year which must mean something, but what? That the same number of people are buying for a lot less than last year?

Come on someone help me here. I started another thread this week about what would stop the stand off between sellers and buyers, there were several articles this week about buyers wanting 30% + off peak and sellers being unrealistic.

If property is selling 40% off asking .

If chains are breaking as surveyors put in realistic valuations.

If lenders are valuing 30 -40% off peak. (Confirmed in various articles )

Then why are we not seeing this in the stats?

It is clear that there is a LOT of property just sitting there doing nothing with the sellers waiting for a 2007 offer, but for how much longer can it just sit there, when July is the busiest month for moving which means the offer would have gone in in April / May. I think we have already passed the peak for the current bull trap, the RM report said it was the end of the dead cat bounce, but how long is it going to take before sellers / EA's / bulls / etc catch up to the idea that property has fallen 30 -40% in as much as the vast majority of buyers are not happy to pay more than that for the properties currently on the market, and lenders are not happy to give more than that to anyone getting a mortgage.

Where are the properties that are selling at 40% off peak? In my area they only things selling at 40% off peak are ex new builds which have been repossessed and the management agents have gone bust meaning the seller buys at a low prices as they do not know how much the maintanence of the building is.

Theres a difference between asking price a valuation price. When I sold in 2007 I was advised to stick the property up for 5% more than it was worth because no one ever really wants to pay the asking price. I suspect its no difference now. An asking price has no relevance to the actual price of the property.

If I could even get 35% off in my area I would be buying now but its only 15-20% max. The reality is there are few houses for sale in my areas compared to this time last year and therefore these sellers are able to get a reasonable price for the property. Until more forced sellers come the market I doubt you will see the 40% falls you talk about.

[Sybil13]

Where are the properties that are selling at 40% off peak? In my area they only things selling at 40% off peak are ex new builds which have been repossessed and the management agents have gone bust meaning the seller buys at a low prices as they do not know how much the maintanence of the building is.

Theres a difference between asking price a valuation price. When I sold in 2007 I was advised to stick the property up for 5% more than it was worth because no one ever really wants to pay the asking price. I suspect its no difference now. An asking price has no relevance to the actual price of the property.

If I could even get 35% off in my area I would be buying now but its only 15-20% max. The reality is there are few houses for sale in my areas compared to this time last year and therefore these sellers are able to get a reasonable price for the property. Until more forced sellers come the market I doubt you will see the 40% falls you talk about.

Can I just say that it is NOT the 40% I am talking about , I was referring to the Firstrung Article that said:

The most startling omission from the RM report and commentary is the lack of explanation for the disparity between the average asking price of £226K and the recorded average selling price of circa £160K. This suggests, with some certainty, that delusional vendors are still asking for prices 40% above the true market valuation. Until this bizarre artificial gap 'crunches' the housing market will continue to stagante and deteriorate

I think that was the point the article, and indeed Miles Shipside has been trying to make ALL year, that just because sellers are not reducing 30 - 40% it doesn't mean that the true value of the property, that is the value a buyer is prepared to pay and a lender is prepared to lend is not 30 - 40% below peak already. And I think what Firstrung was saying is that the stats seem to confirm, whether anyone wants to admit it or not, that property that is actually selling is 40% off peak.

The article quoted earlier by Miles Shipside, in which he said in March that "raised asking prices are doing more harm than good" said:

....that I understand that agent's are trying to survive in a difficult market, but we need to firm out the price drops that we have had, before we can ascertain if they are enough to bring the market to bottom, and accelerate any further drop that may be necessary

In short, by humouring unrealistic vendors over asking prices, agents may be doing nothing more than prolonging their own misery.

lack of mortgage availability is hindering market recovery as sellers who have dealt with the market reality and drastically dropped their asking price are faced with buyers unable to obtain finance. Rightmove commercial director Miles Shipside said:

"Some sellers are still pricing wishfully high, though it is encouraging that elements of the market have adapted relatively quickly to find a new price floor at a discount of around 25% from peak. "

"Until banks get their own houses in order, the active minority of sellers and agents who have drastically adjusted pricing will remain frustrated by the limited functioning of the financial services sector."

The term "drastically " seems to suggest to me we are talking 25 % + off peak, but even then it is hard to find a buyer able to get a large enough mortgage.

I can't believe that it is ONLY in Dorset that property is not selling.

I can't believe that I keep an eye on the ONLY 50 £200000 - £250000 properties in Dorset that can't be sold. The truth is I have been watching them for months AND NOT ONE HAS SOLD. STC yes and back on the market again. Under Offer yes but then back on the market, but NOT ONE HAS SOLD.

I am certain they all have people making offers , I have friends , cash buyers, who have put in offers on 6 at 26% off peak , all turned down with "we have had higher offers", the properties still sit there, my friends are not interested now at anything more than 35% off peak .

I think sellers will regret not having taken at 25% off peak offer in April this year, by the autumn I think the tide will have truly turned ...........

[Pytyr]

I know I have asked this before but feel a need to ask it again as whatever explanations I have had just don't add up.

I know I am ALWAYS told that you cannot use stats from different sources.

I have said previously however, that as RM report ASKING prices and Nationwide / Halifax report selling price (prior to valuation), then it seems relevant surely to say as they did in the article related to RM's June figures:

I posted a thread a few weeks ago about:

1. lenders valuing at the 30 - 40% from peak and chains breaking.

2. RM saying in January that sellers needed to reduce prices 25 % +

3. Hometrack saying that a survey of EA's confirmed property is selling at 30% off peak

4. RICS in March saying that they thought there had been 30% falls already and Nationwide and Halifax figures were incrorrect.

etc etc..

I said in that thread that I believed that if RM & Savills etc were saying in Jan 2009 sellers needed to reduce by 25 - 30% it would be 35 - 40% by Jan 2010.

Yet here we have figures that appear to confirm property is already selling 40% below asking so why isn't that showing in the stats?

I asked previously, the one house per agent per month that is selling is that selling to someone mad enough to pay peak prices? It can't be can it if the selling price (pre valuation) is showing at 40% below RM's asking ......

So it must be sold by the one seller willing to reduce 40% , so why isn't that showing up in the stats?

Not clever enough to figure this for myself. Is it because there are a lot of cash purchasers?

I know lending levels are down 60% whilst approvals are about on a par to last year which must mean something, but what? That the same number of people are buying for a lot less than last year?

Come on someone help me here. I started another thread this week about what would stop the stand off between sellers and buyers, there were several articles this week about buyers wanting 30% + off peak and sellers being unrealistic.

If property is selling 40% off asking .

If chains are breaking as surveyors put in realistic valuations.

If lenders are valuing 30 -40% off peak. (Confirmed in various articles )

Then why are we not seeing this in the stats?

It is clear that there is a LOT of property just sitting there doing nothing with the sellers waiting for a 2007 offer, but for how much longer can it just sit there, when July is the busiest month for moving which means the offer would have gone in in April / May. I think we have already passed the peak for the current bull trap, the RM report said it was the end of the dead cat bounce, but how long is it going to take before sellers / EA's / bulls / etc catch up to the idea that property has fallen 30 -40% in as much as the vast majority of buyers are not happy to pay more than that for the properties currently on the market, and lenders are not happy to give more than that to anyone getting a mortgage.

Sybil, you need to get over your focus on the UK property market. This is a symptom. Look at what caused the asset boom and ask yourself what will happen next. UK house prices are an irrelevance.

People are saying that this marks the transistion of economic power from the west to the east. Eastern cultures are very conservative and unlikely to innovate. I think that the future still lies in the west but we don't know what that future is yet.

Capital tied up in non prouctive assests (property) will be tranferred to productive assets. The black swan will be a technological innovation.

I'm bullish about the future, I'm bearish about property.

[Emy74]

Can I just say that it is NOT the 40% I am talking about , I was referring to the Firstrung Article that said:

I think that was the point the article, and indeed Miles Shipside has been trying to make ALL year, that just because sellers are not reducing 30 - 40% it doesn't mean that the true value of the property, that is the value a buyer is prepared to pay and a lender is prepared to lend is not 30 - 40% below peak already. And I think what Firstrung was saying is that the stats seem to confirm, whether anyone wants to admit it or not, that property that is actually selling is 40% off peak.

The article quoted earlier by Miles Shipside, in which he said in March that "raised asking prices are doing more harm than good" said:

The term "drastically " seems to suggest to me we are talking 25 % + off peak, but even then it is hard to find a buyer able to get a large enough mortgage.

I can't believe that it is ONLY in Dorset that property is not selling.

I can't believe that I keep an eye on the ONLY 50 £200000 - £250000 properties in Dorset that can't be sold. The truth is I have been watching them for months AND NOT ONE HAS SOLD. STC yes and back on the market again. Under Offer yes but then back on the market, but NOT ONE HAS SOLD.

I am certain they all have people making offers , I have friends , cash buyers, who have put in offers on 6 at 26% off peak , all turned down with "we have had higher offers", the properties still sit there, my friends are not interested now at anything more than 35% off peak .

I think sellers will regret not having taken at 25% off peak offer in April this year, by the autumn I think the tide will have truly turned ...........

I'm in Greater London so things may be different here than where you live but 6 weeks ago someone I know phoned up about a property which had been on rightmove for 5 days. They were told the property already had 8 offers on it and they were not allowing anymore viewing. The property was on at 250K and was about 20-25% underpriced but needed a lot of work.

I think people have not taken into account the amont of people who have STR'd and low interest rates. My department has about 15 people in it there ar 3 of us who have STR'd. One will soon completed on a property and the other is panicking trying to find somewhere as he feels hes missed the boat as prices have started to rise. I'm the only one who believes that prices have further to fall. Ive also come across others who believe they have to take advantage of low 10 years fixed rates which are around.

In my opinion this will be a long drawn out proceess and it could be 2011-2012 before we see 30-40% falls from peak. Prices are not going to start to fall again until we start seeing the forced sellers out in force and it could be the end of the year before this happens and the STR fund/Investor fund runs out.

[Sybil13]

Sybil, you need to get over your focus on the UK property market. This is a symptom. Look at what caused the asset boom and ask yourself what will happen next. UK house prices are an irrelevance.

People are saying that this marks the transistion of economic power from the west to the east. Eastern cultures are very conservative and unlikely to innovate. I think that the future still lies in the west but we don't know what that future is yet.

Capital tied up in non prouctive assests (property) will be tranferred to productive assets. The black swan will be a technological innovation.

I'm bullish about the future, I'm bearish about property.

Sadly you are talking to the bear of little brain, trying to see the bigger picture ........but as you say , currently can see little further than putting out the thought of sustainable recovery based on property values falling back in line with current lending levels etc etc............

I know you are right, "we don't know what the future is yet."

I know I could argue that property will come down 20 - 30 - 60% but heavens, none of us know what factors will feed into the equation.

Meanwhile in my own little bear way I continue to attempt to put forward some contribution at the current level of my understanding, whilst keeping in mind that any form of understanding is always a limitation.

I would love to be able to aspire to where you clearly feel I should currently be in my thinking , but I think it might be a while yet before I move on in any significant way.........

I keep thinking, "this week I will stop posting " time is very precious currently, but something drives me on.

Give me a reminder every so often as to what else I should be including in my thought processes .....I like the concept of a "black swan".

Meanwhile I will continue to practice "the rain in spain falls mainly on the plain".........

[Sybil13]

I'm in Greater London so things may be different here than where you live but 6 weeks ago someone I know phoned up about a property which had been on rightmove for 5 days. They were told the property already had 8 offers on it and they were not allowing anymore viewing. The property was on at 250K and was about 20-25% underpriced but needed a lot of work.

I think people have not taken into account the amont of people who have STR'd and low interest rates. My department has about 15 people in it there ar 3 of us who have STR'd. One will soon completed on a property and the other is panicking trying to find somewhere as he feels hes missed the boat as prices have started to rise. I'm the only one who believes that prices have further to fall. Ive also come across others who believe they have to take advantage of low 10 years fixed rates which are around.

In my opinion this will be a long drawn out proceess and it could be 2011-2012 before we see 30-40% falls from peak. Prices are not going to start to fall again until we start seeing the forced sellers out in force and it could be the end of the year before this happens and the STR fund/Investor fund runs out.

You could be right, but in January there was a lot of talk about "green shoots" , people went out in force to buy, my friends started to panic too, so many properties went STC, but then the news started to get more negative until this recent RAMPING, and offers were withdrawn.

I think that could well happen again. The NAEA said the other day that offers currently being put forward come from people who haven't even got their properties on the market yet. As the average time on the market is something like 26 weeks , I think we are going to see a lot of properties back on in the next few months. I sense that we are past the point where people are going to pick up the few cash rich purchasers willing to pay more than 25% off peak.

I know there are a lot of factors playing into this, and the shortage of property (60% down from last year) is clearly playing into this. But that said, as I have just stated in another post on this thread, of the 50 + properties I have been watching, NOT ONE HAS SOLD.

I think there is a big difference between a shortage of properties pushing prices up, and a shortgage of properties with offers of 25 - 40% off peak on them and sellers refusing to budge.

[the primitive]

Lots of references to the "equity rich" keeping the market going. It's almost as if the market is dependent on them. I wonder who will support house prices once this lot have shot their bolt.

Erm, no-one. Prices will fall fast.

Everyone I know who is buying now (and there are a few) have all got at least 25% deposit.

[neon tetra]

Just a thought...

The Rightmove index is based on initial asking prices, and is not therefore very useful (other than to measure sentiment, or delusion). We know this already.

We also know that, by using Property Bee on Rightmove, there are many examples of prices being slashed on properties that have been on the month for 6 months or so in some areas.

Is there any way that Property Bee can be used to come up with a more meaningful figure? The Property Bee tool must have access to the overall list of asking prices(?). This will surely give us the data that we want to see.

Anyone have a bright idea of how to do this?

[Rinoa]

QUOTE The most startling omission from the RM report and commentary is the lack of explanation for the disparity between the average asking price of £226K and the recorded average selling price of circa £160K. This suggests, with some certainty, that delusional vendors are still asking for prices 40% above the true market valuation. Until this bizarre artificial gap 'crunches' the housing market will continue to stagante and deteriorate.

Sybil, The reason for the disparity is that Rightmove use mean averaging and Halifax/Nationwide use median.

Mean averaging is simply all the prices added up and an average price calculated. Median is the middle price in a list of prices. It is where half the prices are above this figure and half below.

Either works OK on its own to show rises and falls, but it looks odd when compared with other indices using another type of calculation.

Forget about the huge disparity, it's only a mathmatical oddity, not house prices selling at 40% off asking prices.

[Sybil13]

Sybil, The reason for the disparity is that Rightmove use mean averaging and Halifax/Nationwide use median.

Mean averaging is simply all the prices added up and an average price calculated. Median is the middle price in a list of prices. It is where half the prices are above this figure and half below.

Either works OK on its own to show rises and falls, but it looks odd when compared with other indices using another type of calculation.

Forget about the huge disparity, it's only a mathmatical oddity, not house prices selling at 40% off asking prices.

Was only quoting First Rung - Mortgage Brokers:

The most startling omission from the RM report and commentary is the lack of explanation for the disparity between the average asking price of £226K and the recorded average selling price of circa £160K. This suggests, with some certainty, that delusional vendors are still asking for prices 40% above the true market valuation. Until this bizarre artificial gap 'crunches' the housing market will continue to stagante and deteriorate.

Also Reuters columnist James Saft in his article:

UK Property a Pig That Wont Fly said:

The pig that is British property is furiously flapping its wings, but despite signs of a recovery in prices and activity, rest assured there will be no take-off.

The country, which witnessed a property bubble that made the U.S. seem sober and sensible in comparison, has seen prices fall by about 20 percent but still faces a tough recession, rising unemployment and serious short and long term questions about the price of financing.

In the face of this, Britons seeking to sell their property last month turned again to a tactic that worked so well in the boom years: they raised prices, with property website Rightmove recording a 2.4 percent rise in asking prices in May.

“While some of the impetus behind the increase of over 5,000 pounds in average asking prices will be due to ambition or optimism, it will also be out of necessity as new sellers attempt to scrape together enough equity to move,” Miles Shipside of Rightmove said.

Just how ambitious can be seen by comparing Rightmove’s average asking price of just over 227,000 pounds with an average April selling price in the Halifax survey of 154,000 pounds.

But obviously just another pile of muppets and not as knowledgeable as you Rinoa

Edited June 21, 2009 by Sybil13

[Houses_Burning]

I dont trust Rightmove with any of the figures they come out with. I think they make the whole lot up every month to suit their own interests.

[stu2006]

* House prices rose by 1.2% in May

* Annual rate of decline improves sharply from -15.0% to -11.3%

* Low supply levels may explain some of the improvement in price trends

Not seen this anywhere yet but its on the nationwide site

[Kazuya]

* House prices rose by 1.2% in May

* Annual rate of decline improves sharply from -15.0% to -11.3%

* Low supply levels may explain some of the improvement in price trends

Not seen this anywhere yet but its on the nationwide site

Thats old news on here and debated already.

June figures are due any day now

[Willy Weasel]

RM is an interesting sentiment index because it shows how new entrants to the market are thinking. It's a shame RM don't produce a formal index of price reductions and I doubt it has the data to produce a selling price index.

That said, all the latest report confirms is that this is a 'broken' market. The stock of unsold properties is quite simply not clearing as sellers and buyers cannot agree prices. IMHO it will require the next leg down in the economic crisis (bond collapse and massive short-term rise in interest rate) to force sellers to capitulate.

I've got a funny feeling that when TSHTF prices may fall off a cliff very quickly indeed.

[the flying pig]

Absolutely. I'm the biggest uber, uber bear on this forum - but even I know that initial asking prices in East Anglia didn't drop 6.6% last month. But Rightmove reckon they did...

RM claims to be mix adjusted but i don't think it is, at least not in any sensible way.

[Sybil13]

OK so we have Miles Shipsides June contribution which like the CEBR and RICS get less and less bearish despite NOTHING selling.

In January 2009 Miles Shipside said that sellers needed to reduce 25- 30%.

In March 2009 Miles Shipside said that "Raised Asking Prices were Doing More Harm Than Good", and that sellers that had DRASTICALLY cut the price of their home were still finding it hard to find a buyer with a mortgage!

So what does he tell us in June?

Rightmove House Price Index June 2009

........Miles Shipside adds, Its a mistake to confuse the upturn in enquiries and sales with a return to a more normal market. While conditions are much improved on the darkest days of last year, we are now starting to see some big distortions and wild swings due to the combined effects of recession and restricted mortgage availability. As the best deals on property and mortgages are only open to the equity-rich, the new stock that agents are looking to attract has to match what these purchasers want to buy and can afford. €................

The hesitation in asking prices after four consecutive monthly rises appears to highlight that, while new stock remains in short supply, new sellers are having to vary their prices to match local buyer demand.....

With lenders demanding larger deposits, and with both lenders and mortgage surveyors being more conservative..... A large rump of less saleable stock remains, with average stock per estate agency branch remaining stubbornly consistent at just over 70 for the last six months. We would normally expect this to fall, given the lack of new stock coming to market, and the pick-up in sales and mortgage approval figures. This confirms reports that fresh stock of the right type is saleable if priced correctly.

However, older stock is far less saleable if it does not match current mortgage lending criteria. We report a further 62,519 price reductions this month of 2% or more in Rightmoves Property Deal Weekly, compared to 59,072 in our May report. Given lenders tight lending criteria and their raising of fixed rates, the pool of potential firsttime buyers who can mop-up this less saleable stock, which includes repossessions, is reducing further.

Lenders want lower-risk buyers with larger deposits who naturally buy in better areas, not where repossessions tend to be concentrated. Sales of these lower-end properties now rely heavily on pricesensitive cash investors, as buy-to-let mortgages are part of a previous era. Whilst the spring resurgence of interest includes more first time buyers, their average deposits are up from circa 11% a year ago to 25% according to recent figures from the Council of Mortgage Lenders. This clearly limits the number who can play a vital role in completing the bottom of chains.

With limited funds to lend, rationing of mortgages by raising interest rates and requiring large deposits is likely, as demand recovers with the increased number of sales. Unless the markets for wholesale mortgage funding re-open, volumes will remain muted due to a distorted reliance on equity-rich buyers.

The Firstrung article linked to this thread yesterday said:

UK house prices (asking) have stopped their recent 'dead cat bounce' according to Miles Shipside and his team at Rightmove. Estate agents now have on average seventy properties each on their books, and are only selling ten per month according to RICS...

However, this RICS contention is not supported by recorded data. With only 35,000 property sales a month, according to Land Registry, and the head count of agents being circa the same this would suggest that agents are in fact only selling on average one property per month.

Miles Shipside confirms that old stock is just sitting there at old prices and new stock is only selling if it is priced right. Given that Miles Shipside said in Jan 2009 that sellers need to reduce prices 25- 30% it seems surprising that as stock just sits there NOT SELLING he is becoming less bearish in his responses, I wonder if agents have been kicking up a fuss about his normally realistic approach to the property market?

It is clear to me as I trawl through RM that sellers DO NEED TO REDUCE THOSE ASKING PRICES.

Miles Shipside says above that valuations are now conservative, a polite way of saying coming in at 25 - 30% off peak.

As know from recent articles chains are breaking as valuations confirm that property cannot be sold to anyone other than the cash rich , at 2007 values.

BUYERS WANT 25 - 30% OFF PEAK, or so I am told time and time again in articles and lenders too want realistic valuations.

That is £300000 properties £210000

£250000 properties £175000

£200000 properties £140000.

Apparently that is what is selling to anyone needing a mortgage or without the cash to pay 2007 values.

A few overvalued properties are selling to cash rich buyers but this cannot be considered the norm, or supportive of the wider market can it?

Shipside therefore highlights the stand off between sellers and buyers and confirms what was said on HPC last week that it is not that there are 4 buyers for every property but that nobody wants overvalued properties except a few bullish buyers with a bit of cash in their pocket.

So what else is Miles Shipside saying in June 2009 ? Well he is confirming that with the RMBS market closed and lending down 2/3rds and lenders reliant, as they were pre 2001, on deposits but those deposits are dwindling....what? What is he saying? Is he saying that as the market recovers and there is an increased number of sales mortgage lending will become MORE restricted as there just isn't the money there?

Certainly this IS what the CML and others have been implying for the past few weeks when they said:

Both gross and net mortgage lending has collapsed to levels not seen since 2001, raising the question; "could house prices actually fall back to this level, a level which would in effect wipe away the majority of house price growth experienced over the last decade?"

With lenders simply sitting on their huge piles of 'tax payer gifted' bail out cash, in order to meet with capital adequacy ratios as opposed to lending, a severe over-correction now looks a distinct possibility...

"It looks almost inevitable that May approvals will be higher than a year ago for the first time since early 2007. However, activity remains at extremely low levels on any historic comparison and weaker than at any point in the early 1990s. Limited lending capacity and the impact of further job losses are likely to act as a ceiling for how far the improvement can continue, although there could be further modest rises in the coming months."

What is more :

Ray Boulger, of mortgage broker John Charcol, said the increase in price had been driven by a lack of competition and by new rules under which lenders have to set aside more capital to cover high loan-to-value mortgages. "The cost to the lender of making one 90% LTV loan available can be four or five times the cost of offering a mortgage at 60% LTV," he said. "We're in a situation where the more lending a lender does at 90% the less lending they are able to do overall."

So with the RMBS market closed and deposits dwindling and buyers and lenders alike wanting 30% off peak and about 1 million properties sitting on RM unsold and at 2007 values and July being the busiest month historically for moving NOT BUYING, what will stop the stand off between sellers and buyers?

Surely this has to be the last summer that sellers that cannot afford to sell at 2009 values will find themselves an agent willing to market their property .

Edited June 22, 2009 by Sybil13

[sbn]

Yup - as an indicator of house price we're pretty much all agreed - Righmove is next to random.

As an indicator of vendors sentiment however - its movements (not its £ figure) has to tell you something.... even if it is just an indicator of the different types of housing stock coming on the market.

It got as much to to with house prices as egg prices