New sellers knocked nearly £7,500 off their asking prices during the past month as the housing market continued to stagnate, research indicated today.
Asking prices for homes coming on to the market fell by 3.2% during the four weeks to 6 November, the biggest drop since December 2007, according to property website Rightmove (see the Free House Price Valuation guide).
The group says asking prices in England and Wales had now fallen in four of the past five months, leaving the average property valued at £229,379.
It warns that with an unseasonably high number of unsold properties on estate agents' books, sellers face tough competition to find a buyer.
The average home is now taking 102 days to sell, the longest time recorded by the group since it began its index in 2001, as potential buyers adopt a 'wait and see' approach.
There are signs sellers are also putting moving plans on hold until the outlook for the market is clearer, with the number of properties put up for sale falling by 9.1% during the month.
Despite the drop, with an average of just over 24,000 new sellers coming to the market each week, properties for sale still outnumber the level of mortgages being approved for house purchase by two to one.
Rightmove says that while not every property sells and not all buyers need a mortgage, the continuing shortage of home loans was contributing to the current stagnation in the market.
'Good for bargain hunters'
Miles Shipside, director of Rightmove, says: "Agents report that the Christmas slowdown has come early this year, as both would-be buyers and sellers are adopting a 'wait and see' policy until the direction of next year's housing market becomes apparent.
"The combination of high unsold stocks, the mortgage famine, a shaky economy and the normal winter slowdown gives an ideal scenario for bargain-hunting buyers."
He said the traditional rush to complete transactions before Christmas was more subdued this year, with estate agents having an average of 77 unsold properties on their books, an "unseasonably high" figure, despite the slowdown in the number of sellers coming to the market.
Shipside adds: "This month's large price correction shows that new sellers and their estate agents are beginning to show a heightened awareness of the plight of buyers, but a lot of stale stock is still sitting on the market.
"Some sellers have lost their motivation to move, but remain on the market hoping for that special buyer to meet their out-dated and inflated price."
The prices of new properties being put up for sale are now just 1.3% higher than they were a year ago, and the figure is likely to drop into negative territory during the coming months.
Today's figures are the latest in a run of gloomy data on the housing market, which has shown a fall in interest from potential buyers, putting further downward pressure on prices.
Some economists are expecting house prices to fall by 10% during the coming year, but others expect the market to stagnate and trade sideways until mortgage availability improves and the outlook for the economy becomes clearer.
Howard Archer, chief UK and European economist at IHS Global Insight, says: "This (fall) was a dose of reality from sellers as it more than wiped out the incredibly optimistic looking 3.1% rise in asking prices in the month to mid-October.
"We continue to believe house prices will trend down by some 10% from their 2010 peak levels through to the end of 2011, in the face of an unappetising mix of factors.
"Much will obviously depend over the coming months on mortgage availability, the amount of houses coming on to the market and how well the economy holds up as the fiscal squeeze increasingly kicks in."
Further reading/Key links
Valuation Loophole: Free House Price Valuation
Cut home loan debt: Free Remortgage Guide, Free Mortgage Guide
Latest House Prices: Nationwide, Land Registry, Halifax