London home sellers cut 17,000 pounds ($26,500) off their asking prices on average in August, wiping out gains recorded in the first half of the year, Rightmove Plc said.
Asking prices in the capital fell 4.1 percent on the month to an average 405,058 pounds, the operator of the nation’s biggest property website said in a report today. The drop is the biggest in two years and returns values to levels seen in January. Prices across England and Wales fell 1.7 percent.
Reports from Nationwide Building Society and Halifax also signal that the U.K.’s housing recovery is faltering, while Rightmove said a squeeze in the availability of credit may limit price gains. Bank of England Governor Mervyn King said Aug. 11 the banking system is still “badly damaged” and that is keeping lenders’ funding costs high.
“Mortgage levels have a lender-imposed ceiling,” Miles Shipside, commercial director at Rightmove, said in the statement. “If you can’t raise a beefy deposit, cheaper property prices won’t help you much.”
Rightmove’s data show the London boroughs of Wandsworth and Brent led declines in the capital, falling 6.2 percent. Newham was the best performer, slipping 1.2 percent, while the Kensington and Chelsea district fell 1.7 percent.
London realtor Bob Crowley said buyers are bargaining harder for properties, slowing transactions. His planned sale of a London home for 3.25 million pounds stalled when the buyer’s bank gave the house a lower valuation. The initial deal for the four-bedroom property in Notting Hill, home to Prime Minister David Cameron before he moved to his Downing Street residence, fell apart, and the seller achieved the asking price only after turning down several offers for less.
“It wasn’t as straightforward as it would have been in the spring,” said Crowley, who works at Bective Leslie Marsh. “We finally got there, but it’s certainly much harder to get the asking prices now.”
The average stock of unsold property per real-estate agent rose to 79, the highest since July 2008, from 77 in July, Rightmove said. Properties now spend an average of 95 days on the market, the most since January 2009.
The monthly drop in asking prices in England and Wales is the biggest since December, and the second this year. Seven of 10 regions tracked by Rightmove showed declines, led by a 4.4 percent drop in the west Midlands. From a year earlier, national prices rose 4.3 percent in August.
Still, demand for property is showing some signs of strength, Rightmove said. Daily activity on its website reached a record on Aug. 10, with 25.4 million pages viewed, it said.
U.K. policy makers left the key interest rate at a record low of 0.5 percent this month and held their bond purchase program at 200 billion pounds. King said the U.K. faces a “choppy” recovery as banks restrict access to credit.
“We face a banking system that is still badly damaged and which is still trying to repair its balance sheets,” he said on Aug. 11. “It has to raise funding at very high costs, and that makes it difficult for banks to lend.”
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