Blog
Bricomortis
21st July 2008
The Rightmove asking price index is a useful gauge to where the balance of power lies in the UK housing market and the shifting sands of sentiment in the property sector.
In a seller’s market, demand for property outstrips supply and the seller can usually bank on getting the price they aspired to when they placed the property on the open market. In contrast in a buyer’s market there is a rising glut of houses available for sale and buyers find that the price at which a transaction is completed might be substantially below the initial asking price.
The latest Rightmove index shows a definite tilt in the market towards prospective buyers although there are not many of those around! The Times reports that “buyers are paying on average 91.6 per cent of the asking price. A year ago they paid 95.1 per cent….”
The reality may actually be worse than shown by the Rightmove data because there is a difference between the asking price and the final selling price. But the data does hint that sellers may have to revise down their expectations as the market deteriorates. Much depends on whether people need to make a quick sale in which case they might be better dropping the price now rather than endure months of frustration searching for buyers who have left the scene.
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.