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Instructions plummet 55% to six-year low, reveals Rightmove

Instructions plummeted 55% to 61,000 in May, reveals Rightmove’s latest House Price Index.

It is the lowest level since 2003. There were 135,000 new sellers in May 2008. Agents’ unsold stock levels total 71 per branch, down from 72 in April.

Miles Shipside, commercial director at Rightmove says: “Equity poor home owners are either not coming to market, or are tempted to give it a go only by setting their asking price bar too high. With new sellers in short supply, those thinking of selling will also attract bullish asking price suggestions from estate agents starved of the opportunity to market fresh stock.

“The net effect of both these factors is a largely unjustified upward pressure on initial asking prices, which can lead to months of ongoing price reductions as sellers realise that buyer finances are similarly stretched. However, there are a few areas where property to buy is so limited that achieved prices have increased over the last few months.”

Rightmove’s HPI reveals that the average UK property asking price has increased by 2.4% to £227,441, up from £222,077 in April, though prices declined 6.2% year-on-year.

On a regional basis, the shortage of property is most acute in London, where supply has slumped by 66% to 11,478. This compares to 33,479 properties put on the market in April.

Average asking prices in London increased 2.7% to £397,646, up from £387,161 in April, though they are 1.7% down on May 2008 when the average price was £404,541.

The limited supply of property in the capital has prompted London-based Cluttons to moderate its Central London Forecast. The agency has adjusted its forecast to predict a 10% fall in prices in 2009, with a levelling off in 2010. It claims that this will be followed by a return to positive house price growth in 2011. It says that a strong demand from international purchasers together with a more limited supply of property than expected given the loss of wealth and jobs in the capital, have led to this moderation in the overall fall in values.

James Hyman, partner for residential sales at Cluttons, says: "London remains in the grip of a sharp recession, but its position as one the world's principal business centres will underpin the city's recovery. It is still the city of choice for leading businesses and consequently demand to own property here will remain strong in the long run. The market will also continue to benefit from the improved affordability for foreign buyers, given the sharp fall in sterling versus most major currencies."

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