House sellers have been predicted to continue to drop their asking prices in 2011, with the average property price perhaps falling by as much as 5% over the course of the next year. The forecast from Rightmove comes after sellers cut asking prices by 3% in December, the equivalent of around £7,000.
This latest reduction means that falls have now been recorded in five of the last six months, and is a trend which is expected to continue into next year. The property website says that the extent to which prices will fall will depend on whether the base rate of interest begins to rise and whether there is an increase in the number of enforced property sales.
"At best prices will be flat, but a drop by as much as 5% is predicted if sorely stretched lender forbearance buckles as prices fall and repossession numbers jump as a consequence," it added.
Amongst its other predictions for the coming year, Rightmove expects to see a 10% drop in the number of properties put up for sale, as a result of would-be sellers deciding to hold fire until price growth returns. Meanwhile, the number of sales completed is expected to continue to run at around half of the normal level for the second year in a row.
"In 2011 we will see larger falls in weaker markets due to over-supply and forced sales," commented Miles Shipside, director of Rightmove.
"The fact that many would-be buyers do not have the ability to proceed, and some homeowners may find themselves in a position where they are forced to sell, drives prices down.
"These negative factors are likely to outweigh the positive price pressures of pent-up demand for housing and a price under-pinning shortage of quality homes in popular locations.
"This makes forecasting more of a lottery than usual, though the net result is likely to see average national asking prices fall slightly.
"At best they could be close to flat and at worst down by 5% if repossession numbers jump up from one in every 15 sales."
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