UK House Prices Fall on Property Glut

The average asking price of a UK property fell in June as mortgage providers cherry-picked customers and competing properties outnumbered buyers by 15 to 1, property advertiser Web site Rightmove, one of Britain's biggest, said.


"If people can’t get mortgages to buy properties then one of the net results is fewer sales, so the number of unsold properties increases," Miles Shipside, commercial director of Rightmove, told CNBC.com.

The glut of properties available, which is twice what it was at the same time last year, means sellers are having to get more realistic about sale prices, Rightmove said.

The average asking price of a UK property fell 1.2 percent in June from the previous month, to 239,564 pounds ($473,522), according to the June Rightmove House Price Index, which pulls the annual rise down to just 0.1 percent.

The results are at odds with the sector’s seasonal trends and include the first average asking price decline Rightmove has ever recorded for the usually buoyant month.

"Some buyers are nervous about getting into the market at the moment," Shipside said, as the prospect of further weakness keeps potential investors from putting in an offer.

UK mortgage lender HBOS shocked market watchers Thursday by upping its expectations for declines in British house prices to 9 percent. If HBOS's predictions are accurate the bottom for the UK housing market is a long way off, meaning buyers could get more for their money by waiting.

The pessimistic call came in the wake of a record 2.5 percent decline in UK house prices in May, reported by the Nationwide Building Society.

The situation could get worse if the current levels of employment start to slide dramatically, according to Shipside, as the number of forced sales could ramp up, causing prices to drop more severely.

People looking to upgrade their property were in a good spot, the Rightmove findings showed, because any fall in the price of the sold home would be cancelled by the savings on the bought property.