House prices in the U.K declined for the first time this year in July and are likely to fall further over the next few months, according to the latest report from property website Rightmove.
Prices fell 1.6 percent month-over-month to GBP 236,597 after rising 8.1 percent over the first half of the year, the report said Monday. In June, prices increased 0.6 percent.
Commenting on the data, Rightmove director Miles Shipside said that early sellers in 2011 had a chance of worming their way into the more active spring market, whereas those coming to market now at the onset of the holiday season have to price more aggressively as many buyers have already gone to ground.
"Sellers at this time of year traditionally show more pricing restraint than those in the first six months of the year, and we expect further falls over the next few months as buyer momentum ebbs away due to a combination of seasonal factors and a continuing lack of both mortgage finance and buyer confidence." Shipside noted.
Rightmove said that 70 percent of properties that were newly marketed in the first six months of 2011 are still up for sale, reflecting sober market conditions.
Equity-poor aspiring sellers are either unable to come to market or stuck on the market and unable to reduce to a price that will attract buyer interest.
Meanwhile, the equity-rich have an opportunity to increase their chances of success by launching to the market at a price below their over-priced and stale competition, the analyst said.
The number of new sellers declined 12 percent year-on-year, as many owners are unable to raise the deposit required to fund their next move.
The survey revealed that retail price inflation outstripped property prices by 14 percent over the last four years, improving buyer affordability but undermining the perception of bricks and mortar as a hedge against inflation.
In London, property prices fell 1.4 percent month-on-month to GBP 432,641. However, on an annual basis, prices rose 2.5 percent.
Inflation in the U.K slowed unexpectedly to 4.2 percent in June from May's 4.5 percent, figures published by the Office for National Statistics revealed last week. However, the rate continues to stay well above the central bank's 2 percent target.
The British economy expanded merely 0.5 percent in the first quarter. The International Monetary Fund estimates 1.5 percent growth for the U.K. this year.
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