Rightmove: Asking prices down 1.8% in July

Asking prices in the England and Wales property market continued to fall in July, according to the latest Rightmove house price index released today.

To date July has seen a 1.8 per cent fall in prices. This is the largest drop ever recorded in the month of July, and follows a 1.2 per cent slip in June.

Accordingly annual asking price inflation has slipped into the red, down two per cent over the year to July – the first time Rightmove has recorded an annual fall.

Rightmove finds the average asking prices for a property now stands at £235,219 – a cut of £4,345 over the last month.

However, this remains well ahead of the average sale prices of £194,912, according to official figures from the Department for Communities and Local Government (CLG).

The discrepancy could be caused by a realisation among sellers they now have to lower asking prices in order to secure a sale.

"Sellers are finally recognising that they need to undercut their rivals from the outset, rather than testing the market and dropping prices later," argued Miles Shipside, commercial director of Rightmove.

"While this £4,000 reduction is on top of a £3,000 drop last month, sellers’ pricing needs to be at the level where deals are being done.

"It could be a lot better outcome to price aggressively and sell now, rather than accept a bigger reduction later as prices continue to fall."

Some of the sharpest annual falls have been recorded in East Midlands and north-east, which have seen prices drop by six and 4.9 per cent respectively.

London, however, has bucked the trend, recording annual asking price growth of 1.4 per cent.

"The Rightmove survey adds to the stream of evidence pointing to house price weakness both now and in the months ahead, and there can be little doubt that the vast majority of sellers will be unable to shift their property if they do not price them very competitively," commented Howard Archer, chief economist with analysts Global Insight.

Indeed, Global Insight forecasts house prices to fall by 15 per cent in 2008 and 12 per cent in 2009.

Each estate agent now has an average of 86 properties for sale, a figure which has increased for the last six consecutive months. Homes also spend an average of 86 days on the market before being sold – a figure which has remained relatively stable during 2008.

"The drop in transaction levels is the most alarming characteristic of the current market and has the most widespread impact," continued Mr Shipside.

"As well as job losses in both the residential and commercial property industry, there is a massive knock-on effect to other areas of the economy as consumers spend less as they feel less confident and less well off."

Some of the country's leading homebuilders – including Persimmon, Redrow, Barratt Developments and Taylor Wimpey – have announced around 5,000 job losses over the past month.

"In a falling property market, sellers need to work a lot harder to achieve a sale and look at how they can apply a 'kiss of life' to their property transaction.

"They need to work smarter and think and act like professional marketers," concluded Mr Shipside.

Chris O'Toole