Rightmove is warning there could be an overcorrection in house prices if confidence between lenders does not improve.
The website’s house price index re-leased last week shows that the average asking price fell 3.7% between March and April, while the average unsold stock held by estate agents rose from 67 to 70 properties.
Rightmove says the correction in house prices is being driven to an ex-treme and that the shortage of liquidity could trigger a price crash if sellers have to seek lower LTV mortgages.
Miles Shipside, commercial director at Rightmove, says: “Although a slowdown is a natural reaction to over-heated prices, the current correction is in danger of reaching unreasonable extremes if the lack of mortgage liquidity continues to be a problem.”
And Nicholas Leeming, director of Propertyfinder.co.uk, says: “While we are not seeing an overcorrection at the moment, if lenders are still in trouble in a few months’ time there could be a problem because sellers will be forced to reduce asking prices in line with the market.”