Housing market ‘far worse’ than figures suggest

Online estate agent says latest figures underestimate fall in prices by two-thirds

House prices across the UK have already fallen far further than official data and market indicators suggest, Rightmove, the online estate agent warned yesterday, as it revealed that up to 300 estate agents were quitting its service every month.

While the latest figures from leading mortgage lenders such as Halifax suggest that prices are down by 15 per cent from their peak, Rightmove said the falls were up to two-thirds higher.

Miles Shipside, the commercial director of Rightmove, said: “Estate agents tell us that the actual prices that are being achieved [initially between buyers and sellers] for property are down by about 20 to 25 per cent beneath peak asking prices. That has not come out in the national indices.”

His revelation suggests that house prices have not only fallen much further than the highly regarded surveys of Halifax and Nationwide, which both track house prices based on agreed mortgages, but could also be lagging behind the situation on the ground.

Nationwide’s latest survey said prices in October were down by 14.6 per cent on the same month last year, while the Halifax’s revealed they were 15 per cent lower in the same month.

Seema Shah, property economist at Capital Economics, said: “We are expecting a trough of 35 per cent down by the end of 2009.” Asked about house prices for next year, Mr Shipside said: “It hinges on unemployment and repossessions. If there are more repossessions then prices will drop further.”

His comments came as Rightmove said in a trading statement that the dire market had forced 250 to 300 estate agents to leave the market each month between August and October, although the monthly decline actually peaked in July. Rightmove’s estate agency membership fell to 10,700 by the end of October, a 15 per cent decline from its peak of 12,600 a year ago.

The company said: “At least three out of every four estate agents who have left Rightmove over the last year have either gone out of business or were removed for non-payment (which in practice is frequently a precursor to going out of business).” Rightmove said the number of advertisers on its site at the end of October had also fallen, to 17,500, 9 per cent less than a year ago.

Nevertheless, the company remains confident of meeting expectations for its full year, with Mr Shipside adding that he now believes the decline in the volumes of house sales in the UK has “probably reached the bottom” of the market. He added: “For those cash rich bargain hunters there is a good choice of good quality property around. And there is a view that it is a good time to buy a good quality property.”

However, he warned: “It is still an unknown on prices. If you look at volumes [of sales] and mortgage approvals they are about half of what they were in the [early] 1990s [housing recession]. It is about the lack of credit.”

Mr Shipside said last week’s 1.5 percentage-point cut in interest rates would be “good for confidence”, but would not make a substantial difference to the market if it did not feed through to cheaper, and more, mortgages being made available. He added that “new build” properties are taking longer to sell. Mr Shipside said: “The flat market is flat.”

Rightmove also said it was now seeing an increase in gazundering, the practice of a buyer waiting until both sides are poised to exchange contracts before lowering their offer. Mr Shipside said: “Obviously in a falling market holding deals together is particularly challenging.”

Last month, Rightmove said it would cut a fifth of its workforce in order to save £5m a year. Mr Shipside said yesterday that he did not anticipate further job losses.

By James Thompson
Friday, 14 November 2008

Source: The Independent

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