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Home sellers in Britain cut prices for the first time this year in July and will probably keep doing so for the rest of the year, Rightmove said.
Asking prices fell 0.6 per cent to £236,332 (HK$2.81 million) and will drop 7 per cent in the second half, wiping out gains so far this year, the operator of the nation's biggest property website said. In London, the cost of a home dropped 1.7 per cent, led by Kensington and Chelsea, its most expensive district.
Government budget cuts to curb the record deficit have unnerved consumers and sent Nationwide Building Society's gauge of confidence to its lowest in a year. Tighter lending rules and a supply glut may also restrain home price inflation as about 30,000 new homes come onto the market every week, almost three times the number of mortgages granted, Rightmove said.
"Estate agents are suffering from podgy portfolios, and buyers' fitness to purchase is in correspondingly poor shape," Rightmove commercial director Miles Shipside said. "With agents beginning to choke on a surfeit of new stock, sellers are going to have to price at bargain levels."
The monthly drop in asking prices in July was the first since December. From a year earlier, prices rose 3.7 per cent, down from a 5 per cent annual pace in June, Rightmove said.
In London, prices fell 1.7 per cent on the month to £422,248, with drops recorded in 29 of the capital's 32 districts. Kensington and Chelsea, where prices fell 5.2 per cent, remains the most expensive location, and the average home price of £1.82 million there is almost nine times more than in the city's cheapest area, Barking and Dagenham.
The capital's only gains were in Hounslow, Richmond-upon-Thames and Islington.
London's monthly decline was the second biggest in Britain after East Anglia. The West Midlands, where prices are less than half the average in the capital, had the largest gain, with a 2.8 per cent increase.
The annual rate of home price inflation in the capital slowed to 4.8 per cent from 8.2 per cent. Rightmove said there is a "continuing mismatch" between supply and demand.
The supply of new properties for sale in the capital surged 67 per cent in July from a year earlier. Nationally, the number of homes on the market rose 45 per cent.
Capital Economics said in a report last week that the housing market had a "false dawn" last year and prices may decline through 2012. The group sees values dropping 5 per cent in 2010 and 10 per cent in each of the next two years.
While the Bank of England has cut its benchmark interest rate to a record low of 0.5 per cent, "affordability remains far less favourable than following previous house price corrections", Capital Economics said.
More consumers also see home prices declining. Some 54 per cent of people surveyed by Rightmove for its consumer confidence survey due next month expect prices to be the same or lower in 12 months, the company said, citing early responses.
That is up from 44 per cent in an April survey.
This article can be found on South China Morning Post, Wednesday, July 21, 2010

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