Widening gap between asking and selling prices

The Royal Institution of Chartered Surveyors (Rics) has reported that the average selling price of a UK home is now 9% below the asking price.

Rics chief economist, Simon Rubinsohn, warns that the gap could widen in the coming months as vendors are forced to accept lower offers in a shrinking market.

Figures from leading mortgage lenders show the average price of a home falling by around 11% in the past twelve months.

At the same time, transactions have almost halved and in August mortgage lending was down 35% on the year.

In the short-term at least, mortgage rates look set to rise as the credit crisis passes through its most dangerous phase yet and banks return to being extremely nervous of lending to one another.

However, with regard to asking and selling prices there are significant regional variations.

In Scotland, house prices are continuing to rise and the gap between asking and selling prices is at its narrowest.

House purchasers in Wales, the West Midlands, East Midlands and the North West are knocking an average 10% off asking prices to make a sale, while in the North of England the average discount stands at 12.5%.

Londoners are only dropping an average 8.5%, with the market bolstered by the capital’s large job market and diverse economy, although Mr Rubinsohn points out that the advantage could be short-lived because the full impact of job losses in the financial sector has yet to be felt.

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