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Forced sales to break property deadlock

Thursday, 26 June 2008 12:00 AM

Forced sales are likely to be the catalyst which breaks the property deadlock in the London market, according to new research.

Estate agent Cluttons argues financial constraints are set to be the early driving force behind many forced sales, as fixed-rate deals finish and City pay rises fail to come to fruition.

Those who have overstretched in order to secure their mortgage are increasingly feeling the pressure, with current unemployment fears adding to market jitters.

Research from MoneyFacts.co.uk released earlier this week finds the average cost of a fixed-rate mortgage has now passed the seven per cent market for the first time in a decade - making it increasingly difficult to secure an affordable deal.

Sales of second homes are also set to increase at reduced prices, as owners draw in their finances and sell before the market slips further, argue Cluttons.

Cluttons reports this trend could lead to a much needed injection of energy back into the market, with those forced to sell offering appealingly low prices to buyers who have been prepared to bide their time to secure the best deal.

Property portal RightMove.co.uk finds, while asking prices for property in the UK market have fallen by 1.2 per cent over the last month, prices in London are still marginally increasing.

Over the last year the average asking price for a property in London has increased by 2.9 per cent.

"Forced sales will inject some energy into the market and will break the current deadlock between buyers and sellers," said Richard Cotton, senior partner of Cluttons.

"A more sensible price achieved through a forced sale can set a benchmark for home values on a whole street in London.

"This will allow anxious sellers who need to strike a deal and desperate buyers who have been trapped by high prices, a chance to go ahead with a purchase."

Chris O'Toole

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