Sellers at the top end of the housing market are reducing prices as property sales remain flat, reports the RICS.

Property sales are expected to remain flat for up to a year as the shortage of homes on the market continues to hold back activity.

Estate agents reported a fall in the number of new instructions for the 17th consecutive month in July, with the number of properties on their books remaining close to record lows.

There was also a fall in both new buyer enquiries and agreed sales during the month, according to the Royal Institution of Chartered Surveyors (RICS).

Estate agents do not expect the situation to improve in the near future, with sales expectations over three months and 12 months remaining virtually flat.

Simon Rubinsohn, RICS chief economist, said: “Sales activity in the housing market has been slipping in recent months and the most worrying aspect of the latest survey is the suggestion that this could continue for some time to come.”Above: Available for £525,000 in Edinburgh, this three-bedroom detached home is near shops and recreational facilities

Why is this happening?

The group blamed the current stagnation in the housing market on a combination of record low stock numbers, political uncertainty and the aftermath of tax changes.

But it said the shortage of homes for sale was the main factor holding back activity.

It added that the low level of new homes being built following the financial crisis was also constraining the market.Above: This spacious three-bedroom detached home is on the market for £310,000, in Newcastle 

Who does it affect?

While just 1% of estate agents reported price rises across the UK as a whole in July, the softest reading since early 2013, RICS said the headline figure masked considerable regional variation.

It said that in some regions, house prices remained “quite firmly on an upward trend”, led by Northern Ireland, the West Midlands and the south west.

But in central London, more estate agents continued to report price falls than those who saw rises.

There are also signs of this trend spreading from the capital, with price growth in the south east also falling into negative territory for the first time since 2011.Above: Offering six bedrooms and three bathrooms is this semi-detached period home in Carlisle, available on Zoopla for £570,000

Sounds interesting. What’s the background?

The lack of activity is prompting sellers at the top end of the market to reduce their asking prices.

Nearly two-thirds of homes advertised for £1m or more sold for below their asking price, with a third of people settling for up to 5% less than they had originally hoped, while 26% accepted an offer of between 5% and 10% below the level at which they had first marketed their home.

Going forward, estate agents expect average house prices across the UK as a whole to remain flat for at least the next three months.

But they are more optimistic about the next 12 months, with a balance of 28% expecting property values to rise over this period, although this was still the lowest level since July last year, shortly after the UK had voted to leave the EU.

Top 3 takeaways

  •  Property sales are expected to remain flat for up to a year as the shortage of homes for sale continues to hold back the housing market
  •  The number of homes put up for sale fell for the 17th consecutive month in July
  •  There was also a fall in both new buyer enquiries and agreed sales during the month

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