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Ash4781

House Prices Fall In June, But Still First-time Buyers Struggle

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http://business.timesonline.co.uk/tol/busi...icle6549935.ece

House prices dipped in June as rising mortgage rates made it increasingly difficult for cash-strapped first-time buyers to secure home loans, according to new figures published today.

Asking prices dropped by 0.4 per cent in June after four consecutive monthly rises, figures from Rightmove, the property website show.

The asking price for the average home dropped by more than £1,000 to £226,436. However asking prices are still 6 per cent higher than the beginning of the year.

A shortage of property for sale has supported prices in recent months, but Rightmove says that, as mortgage lenders increase their rates and continue to demand large deposits from first-time buyers, sellers are being forced to price their homes more competitively to attract interest.

Many leading lenders have increased the rates on their fixed-rate deals in recent weeks, despite no change in the Bank of England base rate, which remains at a record low of 0.5 per cent.

New buyers who have not saved a deposit of at least 20 per cent are also prevented from taking out the most competitive deals.

There are fears that the increase in the cost of home loans could undermine the tentative signs of stabilisation in the plunging housing market. Figures from Halifax bank showed that house prices rose by 2.6 per cent in May, the biggest rise in one month for six years.

House prices have already fallen by 22 per cent since the market peaked in the autumn of 2007. Miles Shipside, the commercial director at Rightmove, said: “Interest rates for fixed-rate mortgages are now increasing, in line with money-market expectations of higher medium-term interest rates.

“Property deals appear within the grasp of cash-strapped first-time buyers, but every rise in fixed rates frustratingly nudges them a bit further out of reach.â€

“Lenders need to be wary not to choke off the recovery in affordability and activity by punishing the returning buyers with ever widening margins.â€

Home sellers in East Anglia have been the worst affected. Those putting their homes on the market have been forced to cut the price by an average of 6.6 per cent, despite a chronic shortage of homes for sale, local estate agents say.

London sellers have cut their asking prices by only 0.1 per cent during the month, while pockets of demand across the North West and East Midlands have allowed sellers in these regions to raise their asking prices by 4.5 per cent and 4 per cent respectively. Sale prices in Wales have also risen by 1.1 per cent during June.

Demand for detached properties has remained the strongest, despite the housing slump. Sellers have cut their asking prices by 5 per cent, or about £17,000, over the past year, while owners of terraced houses have been forced to cut their prices by 7.4 per cent, Rightmove said.

The asking prices for apartments have fallen by 6.5 per cent over the past 12 months, while owners of semi-detached houses have cut their prices by 6.9 per cent.

Well the figures aren't a surprise as they've been leaked already.

With rising fixed rate mortgages, and muted wage growth affordability improvements will need to come from falling prices.

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The asking price for the average home dropped by more than £1,000 to £226,436

That sums up the situation nicely, average asking price 40% above the average selling price.

Edited by Peter Hun

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House prices dipped in June

Just have to take a moment to point out that this is bullsh1t... or maybe in this case bearsh1t.

Asking prices have reportedly dropped in June. That says nothing at all about what happened to "house prices", IE achieved sale prices.

I'm as bearish as the next man, but you can't ignore the fact that if this report had referred to an asking price rise as a "house price rise", we'd be all over it like stink on stilton.

[Edit: got carried away with my own eloquence. ;) What I meant is that if this report had referred to an asking price rise as a "house price rise", we'd be rushing to explain why asking prices are irrelevant]

Edited by Selling up

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I am convinced that Rightmove now make these figures up. There does not seem to be any consistency with these asking price figures month on month, i would prefer it if they stopped publishing these useless reports as they dont reflect on the housing market at the present time. This may have been a good tool for Rightmove in the boom times to scare people into thinking that house prices would go up forever but these days they cant pull it off whatever spin they put on it.

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Has any journalist every questioned why Rightmove says 'average UK house prices' are £226k but the Halifax says 'average UK house prices' are £160,000 - i.e. a massive difference. Seems an obvious contradiction which no one ever raises. :lol:

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Has any journalist every questioned why Rightmove says 'average UK house prices' are £226k but the Halifax says 'average UK house prices' are £160,000 - i.e. a massive difference. Seems an obvious contradiction which no one ever raises. :lol:

The difference is mostly down the house price distribution having a long upper tail, and hence the fact that the mean (RM) is always quite a bit greater then the median (Haliwide). :D

Edited by spline

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