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Buyers locked out by over-priced homes

Unsold homes have jumped by the largest margin since May 2007 - just before the property market slumped - as 'over-optimistic' sellers price buyers out.


Home sellers' continued optimism and agents willingness to chase new properties by allowing sellers to demand high prices is stalling the market.


Property website Rightmove said its monthly housing survey revealed a 1.7% increase in the average asking price to 235,822, a rise it said was 'misplaced'.


The average number of unsold properties per estate agent branch was up from 70 to 74, Rightmove says.


It added that state spending cuts and fears of an interest rate hike were knocking buyers' confidence, but sellers were not reflecting this.


Rightmove Director Miles Shipside said prices are likely to come under pressure as public spending cuts and tax hikes bite.


'While stock levels normally increase during the first half of the year, this is a larger increase than normal,' he said in a statement. 'Those who are serious about selling should look to price more keenly in the spring selling season.


'While most of the country struggles to sell or raise deposits to buy, demand from cash-rich buyers in London has meant that sellers there can ask record prices,' Shipside added. 'This is driven by London's international status, its preponderance of wealthier buyers, and a shortage of available land and properties.'


Even so, research last week from the Association of Residential Letting Agents (ARLA) showed how the rental market is suffering badly because of high house prices, with families particularly in London and the South East unable to find buyers for their large homes.


The average capital value of rental homes has gone up 11.6% to 447,900, ARLA said. Of its members reporting an increase in property coming onto the market because it could not be sold, the biggest proportion was for family-sized homes 66% reported an increase in semi-detached and 63% reporting an increase in detached.


There was a 14.8% rise in the average capital value in central London and 16.2% in the rest of the South East, but this offset the rest of the UK which collectively experienced a drop of 5.2%.


But specialist investment strategy adviser CheckRisk will say today it expects house prices are set to plunge by between 20% and 25% by the end of 2012.


Rising interest rates and inflation together with high levels of private debt, reduced mortgage lending and a shaky jobs market suggest an imminent downturn, despite latest figures from the Department for Communities and Local Government showing a 0.7% rise in prices for the year to February.


'Effectively, British people have run out of money,' said Nick Bullman of CheckRisk.

 

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