Buyers and Vendors in ‘Stand-Off’

Vendors are banking on a recovery in the property market, the latest figures from Rightmove.co.uk have indicated. Following three months of falls, the property website has seen a sharp 2.1% increase in asking prices combined with a jump in the number of properties coming onto the market in anticipation of the usual seasonal rise in demand. According to the figures, there has been a surge of 132,000 properties coming onto the market over the past month, and this increase, combined with the existing overhang of supply, means that stocks are now 30% higher than they were this time last year. According to Rightmove, estate agents and vendors often push up asking prices during February in anticipation of the customary spring upturn in activity. However, in light of recent market stagnation, 2005 is not a typical spring boom year, says Miles Shipside, Rightmove?s Commercial Director. According to figures released by the Inland Revenue today, numbers of property transactions were down 18% during January and 29% lower than the same month in 2004. However, against the backdrop of a solid economy, there is little urgency for vendors to sell, and they are therefore not under pressure to drop their prices, whereas buyers are becoming more discerning and less willing to pay over the odds for a property. This dichotomy has resulted in a ?stand-off? between buyers and sellers, and as a result Rightmove predicts that the recent market stagnation is set to continue. Liam Bailey, Head of Residential Research at Knight Frank, has urged vendors to be cautious: ?There is a danger that sellers have still not recognised that the market in 2005 is going to be tougher than it has been for at least five years. We do not anticipate price falls this year, except in certain locations where affordability pressures are very tight,? he said. ?However with actual sales activity at far lower levels than during the same period last year and with completion rates and mortgage borrowing lower, vendors need to be extremely careful not to over-price their property to ensure they achieve a sale in a realistic time frame,? Mr Bailey added.