Despite confidence remaining strong in 2006, the property portal’s latest research shows confidence among sellers and buyers slipped in January with 80.5% expecting house prices to rise by 5% over the coming year. This is down from the 83.9% expecting a 6.3% rise last December.
At the beginning of 2007 sellers remained in a fairly strong position with sufficiently high buyer demand, so they hardly needed to compromise on price.
Research prior to the latest base rate rise showed sellers were on average willing to accept a discount of 3.8% on the asking price compared with 4.7% in December 2006.
Many buyers were also making offers above the asking price to increase their chances of securing a home, and for the first time since October sellers were more optimistic about house price inflation than buyers.
But Warren Bright, chief executive of propertyfinder.com, predicts the interest rate rise will cause a shift in the balance of power.
He says: “Recently, sellers have had the upper hand with a limited stock of property on the market relative to the number of buyers. With confidence starting to wane and interest rates on the up we are likely to see a shift in the balance of power from sellers to buyers as demand for property begins to cool.”
He adds that with inflation at an 11-year high, interest rates are likely to rise at least once more this year making it even more difficult for first-time buyers to get on the property ladder.
This in turn is prompting continued growth in the buy-to-let market.
Bright says: “We had expected the housing and mortgage markets to slow naturally in 2007 but a more abrupt adjustment is now a risk.
“It’s time for a pause so the market can digest the cumulative effect of this succession of rate increases.”