Rightmove: 3.2% drop in asking prices

Wednesday, 23 January 2008 12:00 AM

There was a dramatic drop in asking prices for property in the UK market during December, according to the latest house price index from RightMove.co.uk.

The average asking price fell by 3.2 per cent (£7,590) over the course of the month, according to the property portal, bringing annual house price inflation down to 4.8 per cent.

According to the research, the average asking price for a property was some £232,396 during the last month of 2007.

RightMove attributes the striking fall to the introduction of home information packs (Hips) and a customary seasonal slowdown in the market.

Hips were made compulsory for one and two-bedroom homes on December 14th - prompting a rise in the number of smaller properties being offered for sale in before their introduction.

"New listings are very low at this time of year, so the artificial wave of 'low-end sellers' has really distorted the average prices of new properties coming onto the market," said Miles Shipside, commercial director of RightMove.

The RightMove research suggests up to 1.1 per cent of the monthly fall in house prices can be apportioned to the introduction of home information packs (Hips).

However, the festive season also played a role.

"While three months ago we forecast the final phase of Hips would drop average prices this month, a substantial element of the fall reflects genuinely tough market conditions, and many sellers who have listed this month have priced below the market to try and sell," continued Mr Shipside.

In addition to these factors there is a long-term financing problems acting as a break on the market.

"In the current downturn the problem is the property market's increased dependence on mortgage funding raised from the log-jammed wholesale money markets rather than from savings deposits," added Mr Shipside.

Across the country London saw prices fall fastest, with average asking prices down 6.8 per cent, closely followed by the south-east (3.8 per cent) and East Anglia (3.4 per cent).

Only the West Midlands avoided the fall, recording a 1.7 per cent increase in asking prices during December.

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